NFA Live! Bitcoin in 2025!

Key Concepts

• US Government Shutdown: Impact on markets, government services, data publication, and regulatory processes (e.g., ETF approvals).
• Federal Reserve Monetary Policy: Jerome Powell's stance on rate cuts, lack of data due to shutdown, and market expectations.
• Market Sentiment & Interest: Low social interest in crypto, comparison to bear markets, and potential drivers for renewed interest.
• Bitcoin vs. Altcoins: Bitcoin's fundamental strength versus altcoins' struggles, OG distribution phase, and the impact of AI on attention.
• Artificial Intelligence (AI): AI's impact on market attention, potential for a bubble, winners and losers, and its intersection with crypto.
• Portfolio Management: Strategies for capital allocation in 2026, managing risk, and the concept of "dry powder."
• Technical Analysis: Discussion of charts, death crosses, and the copper/gold ratio.

Impact of US Government Shutdown on Markets

The US government shutdown is significantly affecting markets. Key points include:

• Economic Slowdown: Reduced air travel (potentially by 10%) and other government services lead to less spending and business activity.
• Federal Employee Impact: Tens to hundreds of thousands of federal employees are going without pay, impacting their spending power.
• Data Blackout: Crucial economic data, such as inflation and labor market figures, is not being published. This hinders decision-making for government agencies and the Federal Reserve.
• Regulatory Delays: The shutdown is "gumming up" legislative processes, preventing the approval of important financial products like spot altcoin ETFs, which are seen as "disastrous in current market conditions."
• Market Ambiguity: Markets dislike uncertainty, and the shutdown creates ambiguity, leading to caution and reduced investment activity. Rob notes that people are "not do not want to get heavy into markets."
• Potential for Liquidity Unleash: Guy suggests that the eventual end of the shutdown could "unleash quite a lot of liquidity," potentially stimulating markets.

Real-world Application: Ben expresses concern about travel disruptions for the upcoming Bitcoin Amsterdam conference, anticipating delays and longer airport wait times due to the shutdown's impact on air traffic control. Rob confirms these delays, citing personal experience with flights being affected by safety issues.

Federal Reserve Policy and Data Scarcity

The government shutdown has created a data vacuum, complicating the Federal Reserve's decision-making process, particularly regarding interest rates.

• Powell's Stance: Jerome Powell has pushed back against market assumptions of a December rate cut, emphasizing the need for data.
• Lack of Key Data: Inflation, labor market, and GDP data are unavailable, making it difficult for the Fed to assess economic conditions. The Atlanta Fed's Nowcast for Q3 GDP is estimated at 4%, but the lack of updated data makes it less reliable.
• Market Expectations vs. Fed Action: Prediction markets still anticipate a December rate cut, but the absence of data leaves Jerome Powell in a difficult position.
• Rob's Perspective: Rob believes Powell will "air on the side of caution" due to the lack of data, potentially leading to no rate cut. He warns of a "storm" and "quite a tumble" if the market, which is pricing in a cut, is disappointed.
• Guy's Perspective: Guy points out that Powell's term as Fed Chair ends in May 2026, and he may be more hawkish to safeguard his legacy by not being remembered as the one who allowed inflation to resurge. He notes dissent within the FOMC regarding rate cuts.
• Bank of Japan Speculation: There's speculation about the Bank of Japan potentially raising rates, which could be "inopportune" if it occurs in December.

Rekindling Interest in Crypto

The current market sentiment is characterized by low social interest, resembling a bear market rather than a bull market.

• Chicken and Egg Situation: Ben highlights that "price leads narrative," meaning price needs to increase to generate interest.
• Bitcoin's Fundamental Strength: Guy believes Bitcoin is fundamentally strong, supported by ETFs and a clear use case.
• OG Distribution Phase: Guy references Jordi Vissa's argument that Bitcoin is in an "IPO-style distribution phase," where long-term holders are cashing out significant amounts. This is seen as a potential factor in Bitcoin's price action.
• Altcoin Struggles: The wider altcoin market is suffering significantly, with many investors losing faith due to widespread losses, even on projects with good fundamentals.
• AI Stealing Crypto's Thunder: Guy argues that AI has "stolen a lot of crypto's thunder" by capturing market attention, which was abundant in 2021. He suggests that people had more "time" then, which they focused on crypto, but now attention is diverted to AI.
• The Need for Attention and Liquidity: When attention wanes, liquidity also decreases.
• Marriage of Crypto and AI: Guy proposes that crypto needs to find a way to regain attention, suggesting a "marriage of some sorts with AI." He points to Coinbase's new payment protocol (XX42) enabling autonomous payments for AI agents as a potential area of interest.
• Rob's Counterpoint on AI: Rob is skeptical of Coinbase's payment system due to its uptime issues. He also references Michael Bur's massive short against Palantir and OpenAI, believing AI companies will collapse, similar to the dot-com bubble. He argues that a market downturn due to AI collapse would be even worse for crypto.
• Return to Fundamentals: Rob suggests a return to the "cyberpunk era" and core Bitcoin ethos, moving away from "crap trash meme coins" towards projects with actual utility. Ben humorously questions if "fundamentals" even move the market anymore.

Portfolio Personalities and Market Sentiment

The hosts humorously describe their crypto portfolio personalities:

• Guy: His portfolio leans towards "Greek tragedy," or more specifically, a "depressed Russian novelist."
• Rob: His portfolio is a mix of "Zen" (from Bitcoin) and "tragedy" (from altcoins). He likens it to the Dallas Cowboys, expected to win but often losing.
• Ben: He presents a chart showing consistent upward movement in crypto markets over years (three-month candles), contrasting with the prevalent "depressed" sentiment. He attributes this to altcoin underperformance and Bitcoin's sideways movement. He likens the current bull market to a longer version of the 2019 move, with Bitcoin leading and altcoins lagging.

Capital Allocation for 2026 and AI Bubble Concerns

• 2026 Allocation Strategy: Rob plans to reduce his altcoin positions significantly and hold 25-50% in Bitcoin, with the remainder in cash or stablecoins. This is to maintain "dry powder" for future opportunities. He emphasizes the importance of multiple revenue streams to avoid stress.
• AI Bubble Debate:
  • Valuations: While valuations are high, the hosts acknowledge that AI companies are not like dot-com era failures (e.g., Pets.com) as many are profitable.
  • Michael Bur's Short: Michael Bur's short position against AI companies is discussed, with Rob noting Palantir's extremely high P/E ratio (500-700x) as a potential justification.
  • Winners and Losers: Guy believes AI is a viable technology but acknowledges there will be "winners and losers." He questions the long-term viability of companies like Meta if they don't succeed in AI, drawing parallels to the metaverse's failure.
  • Expectations vs. Reality: The discussion touches on the gap between expectations for AI (e.g., robot assistants) and current reality, which could impact valuations.
  • Alpha School Example: Rob introduces "Alpha School," an AI-driven educational model, as a potentially more impactful innovation than the Neo robot.

Technical Analysis and Market Indicators

• USDC Exclusion from Total 3: The exclusion of USDC from "Total 3" (altcoin market cap excluding stablecoins) on TradingView is discussed. While possible to include, it limits historical data.
• Copper Bottoming Against Gold: A correlation is noted where Bitcoin rallies when copper bottoms against gold. The challenge is identifying the exact bottoming point, which is often only clear in hindsight.
• Bitcoin Dominance: Rob plans a two-hour video dedicated to the question of whether Bitcoin dominance is heading higher.
• Death Cross: A death cross is anticipated within the next week or two. Historically, death crosses have marked local lows in the market.

Future of NFA Live

The hosts are uncertain about whether NFA Live will continue next week, as Ben will be at Bitcoin Amsterdam. They will let market conditions guide their decision, potentially finding a third host if the market is not "ripping." They acknowledge a significant viewership across platforms.