daninomics

Investment Strategy | Personal Finance | Global Markets & Geopolitics

[Tracy Shuchart (𝒞𝒽𝒾 ) @chigrl]

The reason nobody is sure why BTC is pulling back is because everyone is looking for a single cause when this is actually a systems failure with multiple transmission mechanisms reinforcing each other.

Here's what actually happened mechanistically:
Bitcoin ran from $40,000 to $126,000 in less than a year on a very specific narrative: Federal Reserve easing cycle plus institutional adoption through ETFs equals sustained bull market. The market built up $94 billion in futures open interest, with some platforms offering leverage ratios as high as 1,001 to 1. That setup alone created extraordinary fragility.

The trigger was simple but devastating. Fed officials reversed dovish expectations completely. The market went from pricing a 90 percent probability of December rate cuts to just 40 percent. Real yields on short term Treasuries stayed elevated above 5 percent. The entire macro story that justified Bitcoin at $126,000 collapsed in a matter of weeks.

Now here's where the structural vulnerability shows up. The new ETF infrastructure that everyone celebrated as bringing institutional money actually created institutional scale sell liquidity that never existed before. When the macro narrative broke, institutions could exit with one click. We saw $1.1 billion in ETF outflows in just days. This isn't retail panic selling. This is professional portfolio managers rebalancing away from an asset whose fundamental thesis just evaporated.

Simultaneously, long term holders who bought Bitcoin between $40,000 and $80,000 started distributing. They offloaded 815,000 Bitcoin in 30 days. These holders aren't selling because they think Bitcoin is worthless. They're selling because they see volatility ahead and they're sitting on 50 to 150 percent profits. Smart money doesn't ride drawdowns when they can step aside and rebuy lower with the same capital.

Here's where it becomes a cascade. When price broke the $100,000 support level, technical stops triggered across the entire derivatives complex. Over $20 billion in leveraged positions got liquidated throughout October and November. Some single day events saw $3.2 billion wiped out. The liquidations themselves created additional selling pressure, which triggered more stops, which forced more liquidations. Open interest collapsed from $94 billion to $68 billion, but there's probably still more leverage that needs to clear.

The critical insight everyone is missing: there are no natural buyers at these price levels. Institutions are rebalancing away from risk assets. Long term holders are waiting for lower prices to rebuy. Retail got scared off by the violence of the move. And new buyers won't step in until the leverage gets fully flushed and price stabilizes.

So the market has to fall far enough to accomplish three things. Clear the remaining leverage completely. Reach prices where long term holders stop distributing and start accumulating again. Find the level where actual value buyers with real capital see opportunity worth the volatility risk.

The $600 billion wipeout you're seeing is mostly the evaporation of unrealized gains that were paper wealth to begin with. When Bitcoin went from $40,000 to $126,000, that represented about $1.7 trillion added to market cap. A lot of that was pure multiple expansion based on a macro narrative that turned out to be wrong. Now the market is repricing based on reality: high real yields, no Fed easing, strong dollar environment.

This isn't mysterious. It's textbook deleveraging dynamics in an asset with no cash flows to anchor valuation, extreme leverage ratios, and a macro thesis that broke. A 25 percent correction after a 215 percent rally with 1,000x leverage in the system is actually normal market behavior when the fundamental story changes. The violence of the move reflects the amount of leverage that was built up, not any change in Bitcoin's long term prospects.

The real question isn't why did this happen. The real question is what price level actually clears the market and brings in genuine buyers rather than leveraged speculators. That's still being discovered.

[Paulo Macro @PauloMacro]

Grantham used to say that a bear market doesn’t start with everybody getting bearish. It just starts because people are a little less euphoric than the day before.

[Markets & Mayhem @Mayhem4Markets]

The real trick? Buy the close, sell the open. That's the trade.

[daninomics @daninomics]

@TheKingCourt Sounds good to me. Thanks!

[Dan Go @CoachDanGo]

Ps. If you liked this thread, you'll enjoy my newsletter.

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[The Idea Farm @TheIdeaFarm]

"Out of any 15-year period to be invested in equities dating back to 1970, the one we’ve just lived through was the best." Bridgewater Co-CIO Bob Prince

[Alf @MacroAlf]

150+ years of S&P500 returns.

What's your take for 2025?

[Dan Go @CoachDanGo]

30 things no one tells you when you reach the age of 40:

1. No one prepares you for the fact you will go to more funerals & this will increase as you get older. The people you love will eventually pass, so we must cherish them now while we have them.

[Alexis | The Weekend Investor @a_vroenne]

🧵A senior portfolio manager gave me the best investing advice:

"Stop drowning in market noise. We only track 5 numbers that really matter."

Here's what they watch...👇

[daninomics @daninomics]

@FitFounder Hi Dan, Any suggestion for a meal that is technically perfect and can be consumed on a daily basis?

[WOLF @WOLF_Financial]

There’s a lot of confusion surrounding Michael Saylor’s Bitcoin strategy.

Allow me to explain exactly what’s going on.

This could be one of the best investments of your life 👇

[Roger Federer @rogerfederer]

Vamos, @RafaelNadal!

As you get ready to graduate from tennis, I’ve got a few things to share before I maybe get emotional.

Let’s start with the obvious: you beat me—a lot. More than I managed to beat you. You challenged me in ways no one else could. On clay, it felt like I was stepping into your backyard, and you made me work harder than I ever thought I could just to hold my ground. You made me reimagine my game—even going so far as to change the size of my racquet head, hoping for any edge.

I’m not a very superstitious person, but you took it to the next level. Your whole process. All those rituals. Assembling your water bottles like toy soldiers in formation, fixing your hair, adjusting your underwear... All of it with the highest intensity. Secretly, I kind of loved the whole thing. Because it was so unique—it was so you.

And you know what, Rafa, you made me enjoy the game even more. 

OK, maybe not at first. After the 2004 Australian Open, I achieved the #1 ranking for the first time. I thought I was on top of the world. And I was—until two months later, when you walked on the court in Miami in your red sleeveless shirt, showing off those biceps, and you beat me convincingly. All that buzz I’d been hearing about you—about this amazing young player from Mallorca, a generational talent, probably going to win a major someday—it wasn’t just hype.

We were both at the start of our journey and it’s one we ended up taking together. Twenty years later, Rafa, I have to say: What an incredible run you’ve had. Including 14 French Opens—historic! You made Spain proud... you made the whole tennis world proud.

I keep thinking about the memories we’ve shared. Promoting the sport together. Playing that match on half-grass, half-clay. Breaking the all-time attendance record by playing in front of more than 50,000 fans in Cape Town, South Africa. Always cracking each other up. Wearing each other out on the court and then, sometimes, almost literally having to hold each other up during trophy ceremonies.

I’m still grateful you invited me to Mallorca to help launch the Rafa Nadal Academy in 2016. Actually, I kind of invited myself. I knew you were too polite to insist on me being there, but I didn’t want to miss it. You have always been a role model for kids around the world, and Mirka and I are so glad that our children have all trained at your academies. They had a blast and learned so much—like thousands of other young players. Although I always worried my kids would come home playing tennis as lefties.

And then there was London—the Laver Cup in 2022. My final match. It meant everything to me that you were there by my side—not as my rival but as my doubles partner. Sharing the court with you that night, and sharing those tears, will forever be one of the most special moments of my career.

Rafa, I know you’re focused on the last stretch of your epic career. We will talk when it’s done. For now, I just want to congratulate your family and team, who all played a massive role in your success. And I want you to know that your old friend is always cheering for you, and will be cheering just as loud for everything you do next.

Rafa that!

Best always, your fan, 

Roger

[The Cytadel @thecytadel]

As Bitcoin is about to cross $100,000

This piece is more important than ever.

Don’t get blinded by euphoria and remember to respect your capital. 🫡

[Koyfin @KoyfinCharts]

Michael Burry:

"My strategy isn't very complex. I try to buy shares of unpopular companies when they look like road kill, and sell them when they've been polished up a bit".

[Andrew Sarna @SarnaCapital]

Best year of the century for the S&P 500

[Compounding Quality @QCompounding]

31 Years of Stock Market Returns in one chart:

[Alf @MacroAlf]

Here we are.

After a prolonged inversion, the US yield curve just dis-inverted.

Here is why it matters.

Thread 1/

[Tom McClellan @McClellanOsc]

The bond market has known this for 13 months.

[daninomics @daninomics]

@TheKingCourt @elonmusk Would be interesting to see results in US vs non-US. Can be done @elonmusk ?