ThomasBarleyson

(₿ankrupt, dead inside)

[doug funnie @cryptoklotz]

entering my fourth crypto bull market, i've gotten wrong plenty on timing, execution, and asset selection (publicly!), but i deeply know this:

my biggest trades and opportunities happen when buying coincides with either a feeling of dread, or deep, stultifying boredom, or both.

overriding our default wiring to "buy after everything is broken, and there's been nothing but an apocalyptic desert for months, and you don't feel a single spark of joy or hope",

"sell when everything is working ten times better than you could have possibly imagined; leave when you're at the most amazing party you've ever been to, at the apex of enjoyment"

is why trading is hard. it's the most counterintuitive exercise on the planet.

past few months, and potentially next few days-weeks aren't comfortable, but aren't supposed to be, by design. but the opportunity has seldom been bigger tbh

[that1618guy @that1618guy]

https://t.co/gEyr684HLk

[Bags @0xbags]

“ai is going to take everyone’s job”

me who didn’t even want a job to begin with:

[ThomasBarleyson @TBarleyson]

@truecrypto So it seems the whole CT has become professional and started selling relentlessly

[du @thedulab]

If doomers are right, their reward is being able to say they were right. If optimists are wrong, their punishment is being able to say they lived in a state of excitement and wonder all the way up until they were wrong

[Jeff Park @dgt10011]

https://t.co/dvhDRKa1Gm

[Jeff Park @dgt10011]

“But as Bitcoin matures, its volatility should decline as adoption increases and markets deepen”

Ignore anyone who says this

[redphone ☎️ @redphone]

https://t.co/t97GoeySdR

[Douglas A. Boneparth @dougboneparth]

I don’t even want a new year this year. I’ll take a lightly used 2006 if it’s available.

[Brook @brookxbt]

we keep pushing bros

[ThomasBarleyson @TBarleyson]

For future self

[Bags @0xbags]

me thinking about all my years of unemployment

[ThomasBarleyson @TBarleyson]

@dougboneparth Lose 200% in order to gain 20%

[Tomas @TomasOnMarkets]

It’s official - the Fed is likely to begin expanding its balance sheet again soon.

For the first time since 2022.

Bad takes will likely abound on X.

Is this "liquidity positive" on the margin? (yes)

Is this "QE"? (no)

So, what's going on?

And, more importantly, what does it mean for risk asset markets?

Warning - this is a LONG post

The first step

Recently the Fed announced that QT is coming to an end.

The Fed has confirmed it will stop unwinding Treasury (Government bond) holdings off its balance sheet, but will continue to unwind its portfolio of MBS (Mortgage Backed Securities).

As the MBS continue to mature and “roll off” the Fed’s balance sheet, the Fed will then reinvest the proceeds into Treasury bills.

This would imply that the Fed balance sheet would remain roughly flat (essentially "liquidity neutral").

This process will start on December 1.

The second step

However, the Fed cannot just keep its balance sheet flat over the medium-term.

This is because of bank reserves.

Bank reserves cannot fall too low, relative to the size of the US economy - because if they do, the whole banking system starts to break (this happened in September 2019).

As the US economy grows, the financial system needs more and more bank reserves to be able to function properly.

So, at some point, the Fed will be forced to actually start expanding its balance sheet again (which will increase bank reserves).

And this “second step” (balance sheet expansion) may arrive a lot sooner than many expect.

Recently, Fed Chair Jerome Powell said:

“At a certain point, you’ll want… reserves to start gradually growing to keep up with the size of the banking system and the size of the economy.”

Also, New York Fed President John Williams made similar remarks last week.

FED'S WILLIAMS: FED MAY SOON NEED TO EXPAND BALANCE SHEET FOR LIQUIDITY NEEDS

A lot of analysts from across the banking world are now expecting this balance sheet expansion to come as early as Q1 2026 (this makes me think there’s been some “forward guidance whispers” behind closed doors).

Marco Casiraghi, of Evercore, said:

“We think the Fed will start buying enough Treasuries to grow the balance sheet again in the first quarter of next year.”

Most analyst estimates put the expected pace of this balance sheet expansion at around $20bn per month, or around $240bn per year.

To be honest - this is balance sheet expansion for ants.

$20bn might seem like a big number - but in the grand scheme of things, it’s a tiny number.

To put it in perspective - between March 2020 and June 2020, the Fed increased the balance sheet by more than $3 trillion - or more than $800bn per month.

If the Fed were to continue to expand the balance sheet at a pace of $20bn per month - it would take roughly ten years just to return to the balance sheet highs of early 2022.

These developments are not a surprise.

Fed guidance has been laying this out for years.

The plan has always been to grow the balance sheet slowly, at the same pace as GDP growth.

This is not intended to stimulate the economy or asset markets - it’s to ensure that the banking system has enough reserves as the economy grows.

Here’s a chart showing balance sheet projections from a Fed paper in early 2024.

Bills, bills, bills

Notice - the Fed has explicitly stated it is planning to purchase Treasury bills (short term - one year or less).

This is a very important distinction in terms of any potential impact on risk asset markets.

The Fed purchasing Treasury bills is somewhat liquidity positive, on the margin.

But nowhere near as liquidity positive as if the Fed were to buy Treasury coupons (2-30 year).

Technically, it’s not really “QE” unless the Fed is buying coupons.

It’s more accurately described as "reserve management” - some people may label it as “QE-lite”, but I think even this is a stretch.

In previous waves of “real QE” - like 2020 and 2021 - the Fed hoovered up huge amounts of Treasury coupons.

So, the Fed was “removing duration risk” from the market.

This is really the key asset price boosting power of “real QE” - this “removing of duration risk”.

While the Fed buying bills is still liquidity positive on the margin - it is nowhere near as “potent” as previous “real QE” waves in terms of its impact on risk asset markets, because it doesn’t affect duration.

So we have:

🔘 Balance sheet expansion for ants ($20bn per month)
🔘 “Less potent” balance sheet expansion (buying bills instead of coupons)

In my view, this very slow buying of bills will have minimal direct positive impact on risk asset markets.

But due to the avalanche of bad takes that will likely abound - the positive psychological impact may be larger.

It's likely a bearish factor for the Dollar Index (DXY), on the margin.

But wait a second...

We can now get really nerdy.

There is a plausible (and sneaky) way that this wave of balance sheet expansion could have similar effects to previous episodes of “real QE”.

And that is all to do with what the Treasury is doing.

The Treasury is constantly issuing new debt (Treasuries) to finance the Government’s ballooning debt pile.

It can choose how much of this new debt is bills, and how much is coupons.

In recent years, starting with previous Treasury Secretary Janet Yellen in 2023, the Treasury has heavily shifted issuance away from coupons and towards bills - so the “debt mix” has become much more “bill heavy”.

This does have similar market effects to “real QE” - because it’s essentially “removing duration risk” from the market (“liquidity positive” overall).

This tactic has been described as “Treasury QE”, “stealth QE” and “Yellen-omics” - and it has helped to power risk asset markets upwards in recent years.

If, in the coming quarters, the Treasury decides to push overall debt issuance even further towards bills (thereby issuing less coupons) - essentially “removing more duration risk from the market” - while the Fed is also buying bills, this would technically have similar market effects to “real QE”: the Fed expanding its balance sheet and duration risk being removed from markets.

So, to determine whether this might potentially happen - we need to watch the Treasury’s QRA (Quarterly Refunding Announcement).

The latest QRA (released last week) signals that this further curbing of coupon issuance is not likely to happen - in fact, it hints at the opposite.

Here’s the key line:

“Treasury has begun to preliminarily consider future increases to nominal coupon auction sizes”

This means the Treasury is considering increasing issuance of coupons - or “adding duration to the market” (“liquidity negative” overall).

Now, Treasury officials may be “considering” increasing issuance of coupons and they might talk big - but whether they actually do or not is another question.

If they do - this would not be good news for risk asset markets, all else being equal, and would likely completely counteract whatever the Fed is doing and then some.

It could mark the end of the “Treasury QE” gravy train.

Arguably, watching what the Treasury is doing is much more important than watching what the Fed is doing.

Here’s what we know is likely to happen:

🔘 QT stops on December 1
🔘 The first step is to keep the balance sheet flat
🔘 Then, probably not long afterwards, the Fed will start to expand the balance sheet again
🔘 This will be achieved through buying bills (not coupons) and is therefore not technically “QE” and nowhere near as “potent” as “real QE”
🔘 It will also occur at an extremely slow pace ($20bn per month)
🔘 Arguably, the more important factor here is what the Treasury is doing

[hoeem @hooeem]

Your edge is everything.

Without it, you’re aimlessly drifting hoping that you get lucky randomly (spoiler, you won’t).

I have tuned in daily to crypto for the past four years and believe there’s six core edges.

To gain an advantage you need at least one of these 6 edges:👇

1. Psychological edge: control your inner game

If you only master one thing, master this.
The strongest portfolios collapse when the person behind them does.

You can have perfect timing, perfect calls and perfect data, but if you cannot handle stress, fear or greed, it all burns.

Why it matters:
• You cannot hold winners without patience.
• You cannot cut losers without humility.
• You cannot evolve without self-awareness.

How to build it:
• Write every trade and decision down. Review what broke, not who to blame.
• Add friction to your impulsive behaviour. If you revenge-trade, set limits that auto-freeze you.
• Practise gratitude. It reduces tilt and restores clarity faster than any break.

Psychological edge is the difference between knowing the strategy and surviving long enough to execute it.

2. Structural edge: make your capital do more

Most people think they need more capital. What they actually need is to use what they have more intelligently.

Structural edge is about compounding your exposure without overextending your risk.
It is about stacking yield, collateral and positioning so that your capital earns in multiple ways at once.

Why it matters:
Crypto is asymmetric by design. Every extra layer of capital efficiency compounds faster than you expect.

How to build it:
• Layer your yield and exposure. Earn while staying long.
• Reuse your capital where possible, lending against long-term holds to fund short-term trades.
• Track everything with precision. Spreadsheets and systems are alpha, not admin.

Edge is not about size. It is about structure.

3. Temporal edge: learn to play time, not price

Timing is the most misunderstood skill in markets.
People chase entries and exits when they should be studying rhythm and pacing.

Every market has cycles. Every narrative has a heartbeat.
If you learn the tempo of the game, you can stop reacting and start anticipating.

Why it matters:
Most people know what is going to happen, but they act at the wrong time. Early geniuses and late heroes both lose money.

How to build it:
• Think in seasons, not seconds. Know where you are in the broader market mood.
• Buy discomfort, sell euphoria. It is that simple and that hard.
• Watch liquidity, not price. Flow tells you what is coming next.

Those who master timing do not fight volatility. They make it their oxygen.

4. Convexity edge: make small capital explosive

If your stack is small, your edge is agility.
Convexity means structuring bets that have limited downside but unlimited upside.

You do not need to be right often, only brilliantly right sometimes.

Why it matters:
Big players cannot move fast. Small players can. Convexity turns that speed into asymmetric opportunity.

How to build it:
• Take many small shots early in new projects, airdrops, and narratives.
• Keep a record of every experiment. A single hit can fund your entire next chapter.
• Bet small, bet wide, and only scale conviction once you are playing with profits.

Convexity is how small stacks escape gravity.

(you now got to leave this long post and go to the one below to read edge 5 and 6👇)

[Kevin Simback 🍷 @KSimback]

Here’s my simple breakdown on the markets, why stocks have been outperforming while crypto has lagged, and what to expect both short and long term

Stocks have been ripping and for those sitting in crypto it’s been painful to watch (mood shown below)

But stocks have largely been ripping because of the AI infra boom - real capex going into the real economy

If you look closely, you’ll see the indices have been driven by only a handful of stocks, we all know the names, while market breath sits at near decades low

It’s not been a broad based rally and primarily contained to companies related to the AI capex boom in some way

We could just as easily change the picture below to be “most stocks” looking out the window at “AI stocks” so don’t feel too bad

Crypto, on the other hand, doesn’t really benefit from this AI capex boom aside from a little risk curve expansion tagalong

As we should all know by now, crypto is most correlated with global liquidity, and this year we’ve seen many countries expanding liquidity (China being the big one), but the US has not yet entered the game so the net effect has been muted

Yes, TGA drawdown helped at some points but that’s a fiscal driver and we saw the rebuild coincide with a dip, iow it’s not the creation of new base money

Since the Fed started QT it’s drained ~$550b from reserves, this is real base money being taken out of the system, so while the world has been adding liquidity, the US has been tightening

So we’ve had a choppy year for crypto and I would hypothesize that the reason it’s held up so well despite the lack of Fed liquidity is that the debasement trade has started to become more recognized

The net-net is that we’ve actually done ok (I’m talking majors, not your shitcoins) despite the US being in a liquidity tightening regime

But here’s where it gets good - we heard on Wed that QT finally ends Dec 1. That means the 3+ year period of tightening via reserve reduction is over AND this is happening at a time when the Fed is still reducing rates

This sets us up nicely for a US liquidity expansion cycle which feeds the debasement trade which feeds the need for more liquidity. The flywheel is getting set.

So short term we need to pay close attention to Fed liquidity and other short term contributing factors like the TGA drawdown once the gov reopens. My guy @that1618guy has been all over this so give him a follow for updates.

Longer term all roads lead to some form of indirect or direct YCC.

I just don’t see how we avoid this. I won’t wrap this in an eloquent story like @CryptoHayes but let’s just align on a few simple points:

1. The gov won’t raise taxes (aside from local areas, sorry NYC folks)

2. The gov can’t stop spending

If you believe those to be true, then YCC is inevitable, which means QE runs in perpetuity

Bro just gimme the ticker!

All you need to do is hold on through the end of this QT period, don’t get shaken out, then let the Fed work for your bags

It’s that simple, don’t F it up by letting these chop markets get you

[YQ @yq_acc]

https://t.co/PEDSfgz4Xb

[Nik @cointradernik]

This week’s Outlook is now available👇

It’s another week that’s light on the macro front but heavy on the speeches — though we all know that’s not the point of interest this week…

After the chaos of last Friday, I’ve provided updated views on Q4 & Q1 for $HTC $ETH $DXY and $SPX, with a particularly detailed update on $OTHERS 👀

If you’ve already read it and found some value in it pls share and also go get yourselves signed up and trading on @ostium (link below)

🫡

[Bags @0xbags]

thoughts from a ponzi trader:

-manage your risk or the market will manage it for you

-abnormal returns are often the result of abnormal risk

-a strategy that requires zen like discipline to follow is not a strategy, it’s a future failure

-trends need liquidity to be trusted