The great Noelle Acheson, author of Crypto is Macro Now, joined us on Talking Markets yesterday to deconstruct WTF is happening in crypto and beyond. And boy oh boy, is crypto ever macro now…
CRYPTO BEAR MARKET
Bitcoin is “not in a death spiral” but is in a bear market, Noelle says, largely because there are currently “no catalysts to keep it buoyant” and “liquidity is not great.”
And Noelle doesn’t expect liquidity to improve all that soon, as rates around the world are either being held or going up. “You have Bitcoin acting as a liquidity barometer for Western economies and the liquidity outlook is not good,” she said.
WHAT’S DIFFERENT THIS TIME?
4-year Cycle: Noelle thinks the 4-year cycle doesn’t hold anymore, partly because of institutional involvement, because the halving doesn’t matter so much for sell pressure, because mining is not such a key driver of the price anymore.
Volatility: “It has pretty much lost volatility, which was a feature that made it interesting. The volatility of gold is higher than that of Bitcoin.”
Store of value: Noelle says BTC has partly lost this narrative, but she thinks it will return
Still, Noelle think Bitcoin will recover as “it always does, especially when sentiment starts to move the price, which will be the next catalyst.”
THE MICHAEL SAYLOR QUESTION
“My unpopular opinion is that the digital asset treasury craze was very bad for the industry,” Noelle said. “A lot of them just didn’t make sense. We see this in crypto often, where people want to just make money quick and to hell with common sense. And it deflated, as it was always going to do. Digital asset treasuries have nothing to do with crypto utility at all. It’s pure financial engineering.”
Noelle says not all of these companies will survive, and they’re going to have to “sell the crypto that they hold just to be able to wind down.” And if that happened to Strategy that would be “really bad news,” but Noelle doesn’t think it looks likely because of how it’s set up.
AI NARRATIVE ‘OVER-EXTENDED’?
With software stocks the latest to take a beating, Noelle says that the AI trade has been consensus for a long time and that “we’re due for a narrative correction,” and it feels like it’s starting to happen now:
“People are starting to connect the dots on the software companies - if the software companies are replaced by AI agents, who’s going to buy the AI services, chips, etc.”
Add to that how concentrated the market is “and how few clients Nvidia relies on and you realize how vulnerable the valuations are,” Noelle said. “We’re starting to see tech stocks correct while the cyclicals recover, and that’s generally not a good sign for market direction.”
US ECONOMIC HEALTH
Noelle is “more optimistic than I was a couple of years ago” on the health of the US economy. “I’m more optimistic now because the jobs market is slowing but it’s not weak,” she said. “It’s weaker than it was, but the unemployment rate is really the one to keep an eye on here, and that is stable and expected to [come] down in the next report.”
Noelle says that while current consumer inflation numbers are not "terrible," wholesale or producer inflation is climbing. This creates a bifurcated economic environment where rising producer costs alongside falling consumer prices threaten to compress company profit margins, which in turn negatively impacts share prices.
She added that because liquidity indices are largely based on the stock market index, this pressure on stocks could lead to a “downward spiral” for overall market liquidity.
EUROPE
Noelle says that while Europe is a “huge mess” politically, it’s currently “not doing terribly” economically, though it is increasingly defined by a divergence between its northern and southern regions. While inflation has recently dipped under 2%, she said the ESCB is signaling that its next interest rate move will likely be upward: not necessarily to cool the economy, but rather to support the currency.
A big concern for the region is Germany, which Noelle says has come “shuddering to a halt” due to disastrous energy policies. By closing its nuclear plants to rely on Russian imports, Germany has been forced to reopen coal plants to meet its needs, undermining its role as the region’s historical economic driver. Growth, meanwhile, has shifted toward Southern Europe, primarily buoyed by a strong tourism sector.
Thank you Russell Morrison, Joseph Battelle, YF, and many others for tuning in live! We’ll be back Talking Markets on Friday with Dale Pinkert; and stay tuned later today when we’ll drop the latest Macro Sessions with Luke Gromen.
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
