Something went wrong with the Bitcoin price, says Galaxy Digital founder and CEO Mike Novogratz, as the search for the bottom grows more frantic, while another Michael – the Burry kind – sees a “death spiral” ahead for the BTC price.
Of course, Novogratz has skin in the game, so when he told Bloomberg TV yesterday that the bottom would form in the $70,000 to $100,000 range, it is understandable that some might want to view his reasoning with scepticism.
However, an equally quizzical line of attack might be applied to the musings of Michael Burry, who, after all, is the king of shorts – he’s always on the lookout for assets to sell.
If you can stay away from the panic button and have the risk tolerance that permits measured analysis and decision-making, then it’s worth pausing to listen to Novogratz:
On Monday, Bitcoin fell below $73,000, wiping out all of the Trump bounce. At these levels ($75k at the time of writing), they are minded to keep an eagle-eyed watch on Strategy as its net asset value flips from premium to discount.
If the Bitcoin price falls another 10% to around $65,000, then, according to Burry, Strategy will “find capital markets essentially closed.”
As Digital Asset Treasury (DAT) stocks tumble (194 public companies and 72 private companies are holding Bitcoin in treasury), bear in mind that some unrealized losses are more real than others. Fears of imminent bankruptcy are probably overdone.
Next up will be the miners, all adding to the death spiral’s velocity. For Burry, there is no bottom. There is no valuation model for Bitcoin because “there is no organic use case reason for Bitcoin to slow or stop its descent.”
And humming away in the background are the ETFs, whose emergence was heralded with great fanfare but, more than any other instrument, have made it easier for retail investors to speculate and have tightened the correlation with equity markets.
On that last point, though, the correlation might be described as selective. When the Nasdaq falls, so does Bitcoin, but when the Nasdaq bounces, Bitcoin goes AWOL.
Is Bitcoin the Ultimate ‘Inside’ and ‘Outside’ Money?
Which brings us to an interesting note in Noelle Acheson’s Crypto is Macro Now newsletter, essential reading for the crypto-savvy.
She relates the theory of Credit Suisse chief economist Zoltan Pozsar, in which he pointed to “the fundamental shift in global value away from finance and towards physical goods, specifically commodities”, Acheson recalls. Pozsar was developing his theory in response to the Russian invasion of Ukraine.
He dubbed the coming shift to a new global monetary order Bretton Woods III (for those who forget their economic history, Bretton Woods was set up in 1944 at the behest of the US and pegged all major globally traded currencies to the US dollar, which in turn was convertible at the rate of $35/ounce.
Then Bretton Woods II came along in 1971, when it became apparent that there was just not enough gold in the world to keep the gold-backed US dollar functioning as the premier reserve currency that oiled the wheels of booming commerce.
As a result, US President Richard Nixon took the dollar off the gold standard.
Now we come to the interesting part, Bretton Woods III, and what it could mean for the future of Bitcoin.
As Pozsar would have it, we have now entered the era of ‘inside money’, which he defined as assets and debt created by the dollar system, versus ‘outside money’, which he described as commodities, notably gold and oil. He didn’t mention Bitcoin, but we will.
You may have spotted that on Monday, President Trump announced that the US would start stockpiling strategic commodities. Better late than never.
Still, it is an indication that when the world goes dark (the computers are turned off), some things, like gold, silver, copper, oil, palladium, and an assortment of rare earths, will remain.
But surely no computers means no Bitcoin, no crypto, right? Not so fast: although it’s a theoretical possibility, if the world did go dark, the entire value curve would collapse.
Bitcoin Sits Somewhere Between ‘Inside’ and ‘Outside’ Money
Let’s put this another way. Without computers, and increasingly, without artificial intelligence, getting stuff done (made, serviced) becomes problematic.
Or, at a step removed, depending on a debased dollar to underpin the working of the real economy and the actual circulation of physical things, is risky.
Perhaps we should think of ‘inside’ and ‘outside’ money in a way similar to how plastic pollution is depicted in the Disney/BBC sci-fi mini-series The War Between the Land and the Sea (disclaimer: my brother Colin plays the character General Pierce).
In a famous scene, at least on TikTok, we see Homo Aqua returning human-created pollution to its point of origin through a rain of plastic upon the land.
The outside money is knocking some sense into the inside money by raining down gold and silver ingots on those inflated assets and burdensome debts.
Stay with me. Bitcoin is not pure inside money, although it has, of late, become much more integrated into the legacy financial system, and therein lies much of its current problems.
Neither is it pure outside money, in that, although it is so-called hard money because of its flow limit, it could, at least theoretically, collapse should the world go dark in a digital sense.
Yet in reality, Bitcoin is somewhere between the two money poles (inside-outside) of Bretton Wood III, as imagined by Pozsar.
Think about Iran, when the theocracy turned off the internet. Yes, you couldn’t buy tokenized gold or tokenized dollars, but your holding of those assets was still safe for another day, because eventually the theocracy has to enable trade in the modern world.
And when it comes to the other end of the spectrum, the hegemon of global finance, the US, the inside/outside dichotomy expresses itself differently, but in an equally supportive way for Bitcoin.
As the administration seeks to ease the pain of the supposedly ‘scam’ affordability crisis, it will seek to adopt an expansive economic policy.
It is one in which its One Big Beautiful Bill Act of 2025 opens the spigots of tax cuts, on top of plans to cap credit card interest rates at 10% and, unconvincingly, to force Big Tech hyperscalers to bear more of the burden of soaring electricity costs resulting from data center load.
In this context, Bitcoin is outside money, whose value is secured by the world economy’s most valuable commodity – the crystallization of energy as a monetized data package with the property of universal equivalence, albeit still subject to the vagaries of speculative flows.
‘Speculative flows’ is a big caveat, but not when you consider the recent outsized movements in the precious metals markets, especially that 37% intraday crash in the silver price.
As investors rotate out of Big Tech, an Ii bubble imposition looms and ‘Sell America’ gathers pace against the backdrop of macro and geopolitical uncertainty pressing in and US governance norms shattering, Bitcoin is still the smart money, inside and out.
Now consider the following commentary from José Torres, Senior Economist at Interactive Brokers:
“The return of ‘Buy America’ sentiment is poised to continue weighing on precious metals’ performance on balance. Indeed, gold and silver are likely to decline further following a ferocious rally that was initially sparked by fundamentals but has since detached from the driving themes of ‘Sell America’ and a focus on relatively accommodative global central banks that enable excessive fiscal deficits and generate currency debasement.”
Those comments didn’t age well. Gold is trading above $5,000 again, and silver is up 7% today. The dollar has shown signs of life, but on a year-over-year view, it is still trending lower.
And the Nasdaq is off 0.71% at 23,089 after Tuesday’s 1.43% sell-off in what could be the start of the great rotation out of tech.
Cumulative Volume Delta Data Suggests Bitcoin Price Stabilization Around $70,000
Admittedly, Bitcoin is down 0.56% at $75,995, so there’s no definitive sign of a bottom yet, with each attempted lukewarm bounce met with renewed bailing.
What does this all mean for the Bitcoin in your digital wallet? Bitcoin’s safe-haven anti-debasement properties may be screened out by the rush of blood to the head represented by the opening up of the sluice gates to massively leveraged institutional money.
That unwinding will be damaging, but Bitcoin will live on. Indeed, there are tentative signs that the lower end of the Novogratz band could be the bottom.
Our friends at Glassnode pointed out a few days ago the pickup in the spot Cumulative Volume Delta (CVD), which measures the net difference between buying and selling by market takers. A positive bias (buying) in order flow may be emerging.
Source: Glassnode
Glassnode analysts concluded that, “If this buy-side dominance persists, it would support further price stabilisation and a potential push higher.” Since that end-of-January hint of stabilization, Bitcoin, as noted above, briefly fell below $73,000.
Nevertheless, a floor could be forming around current levels. Whether you buy the inside or outside theory, and our novel interpretation of it, the smart money might be starting to DCA in.
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