Is the Cycle Over, Portfolio Psychology, & Prediction Market Alpha

Summary

• The cycle debate resolves bullish for both hosts. With Chris Burniske and other OGs calling the cycle over, Jason argues the market’s composition has changed: in 2018 “99% of people” knew the 4-year cycle and in 2021 maybe 80-85% did, making it self-fulfilling — but the marginal buyer today is “my uncle who bought the BlackRock ETF,” who “doesn’t even know that there’s 21 million coins.” His conclusion: “the 4-year cycle is giving us an amazing opportunity to get in the market.”
• Avi’s core trade framing is the Kim Jong Un fade: as a former dollar-yen trader he watched the yen nuke less on every successive missile test until the market went “unch” — and crypto is doing the same with Trump tariff headlines. “Sell all the optionality you can, which basically means buy Bitcoin when it pukes because of something that’s obviously not going to result in the end of global commerce.” The sell-off is “the easiest trade I’ve seen in crypto in a while.”
• The bear case is real, but much of the selling is psychological: 2013-14 OG whales are selling for the first time into ETH $4K and BTC $120K, and the class of 2017 — who rode two cycles down and think “I should be worth more than $10 million at this point” — is locking in gains. Jason concedes sideways-at-the-highs violates his value-vs-momentum framework, but the market is absorbing the supply; the 2021 analog (sideways at $30K, Zhu Su short 10,000 BTC, “it rips up in their face”) says digestion, not top.
• Buy picks-and-shovels, not hyped shitcoins — Avi says the old playbook is dead and crypto is in a “25-year grind higher.” The edge in names like Robinhood (Jonah’s best investment, bought $20-30, now $135; Avi later calls it his third-largest position behind Nasdaq) is that risk-averse sell-side analysts can’t publish crypto-native upside: “Robinhood is an amazing brand. It’s going to 10X over the next 10 years. The people that study Robinhood can’t even freaking comprehend that.” Practical rule: sell 10%, “see how it sits in your gut.”
• In altcoins, buyback/revenue tokenomics matter: Jordan holds just Aerodrome and Hyperliquid (rebought HYPE at 35 after selling at 45 — “I feel naked… I was kicking myself when it traded up to 58”), and also holds Shuffle (~$400-450M valuation, “printing money” and returning it) and Syrup over Aave. The logic: “the retail universe of shitcoin buyers is tapped out,” so the project itself must be the buyer. “Every other altcoin for the most part is just a meme. And the meme era is dead.”
• Prediction-market alpha, quantified: betting “no” on every will-Trump-say-it market returned ~13% on average while “yes” lost ~20%, because ~71% of Polymarket markets resolve no; ChatGPT deep research with live web search re-prices markets; Hebrew Telegram channels beat English reporting on Israel markets by 3-4 minutes. Meanwhile the big beautiful bill’s cut of sports-loss write-offs from 100% to 90% is pushing capital from DraftKings/FanDuel to Polymarket and Kalshi.
• Calendar trade: crypto still has no wash trading rule, so beaten-down alts get tax-loss-harvested into year-end — Avi got his Solana entry when it went $15 to $9 on December 30th amid likely tax-loss flow — implying a short in the year’s losers into December 30, then buy the flush.

Deep dive

1. Every sign is bullish — except that it’s year four

• The episode’s setup, via guest Jason Yanowitz (“my boss”): this is “the most confused I’ve seen market participants in many years in crypto” — no consensus in the group chats, and “when you see people like Chris Burniske… talking about the cycle being over, you can’t help but get a little bit spooked.”
• Jason’s answer is a market-composition argument: in 2018, “99% of people” who owned Bitcoin knew the halving cycle — watch parties, late-night streams; by 2021 maybe 80-85% still subscribed, so it stayed self-fulfilling. Today’s marginal buyer is different: “my uncle who bought the BlackRock ETF… doesn’t even know what the halving is. He doesn’t even know that there’s 21 million coins.” He bought a gold comp and an inflation hedge.
• Jonah also notes 2021’s ending had a “mystical” confirming shock — the Fed raising rates “at the exact right time to confirm the four-year cycle.” Now “we have the opposite happening.” Jonah’s call, hedged only by respect for the data point: “the 4-year cycle is giving us an amazing opportunity to get in the market.”
• Jonah’s summary of the whole trade: “It feels like a screaming fade and the only thing that you’d have to believe in order for it not to be is that we’re in a 4-year cycle because it’s happened three times… Every single sign is bullish right now — except that we’re on year four of what is a 4-year cycle.” And, as Yanowitz adds, in Q4, “the scary time.”

2. OG whales are selling — and the market is eating it

• Avi’s counter, worth keeping: there are bigger sellers than buyers — 2013-14 guys “selling for the first time,” into ETH $4K and Bitcoin $120K, and “I’ve never seen Bitcoin’s price action do what it’s doing now. It’s really struggling to break past the all-time high.”
• Jason admits the tape violates his own framework — “when you lose momentum, you should probably get out of Bitcoin” — but he’s overriding it because the market is absorbing OG supply and refusing to break down. History rhymes: OGs dumped post-BCH-fork and from $3K to $10K, then again through $30-50K in 2021, the market went sideways, “people like Zhu Su get short 10,000 BTC and then the market rips up in their face.” Avi’s discipline: “I just try to look at the flows. Retail, institutions, and MicroStrategies of the world — are they still buying? Yes.”
• Jason’s demand-side inventory: the new whales are IBIT, TradFi, and the $30-50 trillion wealth transfer from a no-coiner generation to a crypto-pilled one — “let’s not forget that crypto was illegal 6 months ago.” Crypto has already disrupted SWIFT and back office — moving an S&P 500 ETF share peer-to-peer is “cartoonishly difficult” in TradFi — “it just hasn’t been allowed to proliferate.”
• The adoption exhibit: Ripple’s ~$1B acquisition of G Treasury, a 45-year-old Chicago treasury/FX manager serving Fortune 500s like Toyota and Subway, on top of Hidden Road. Avi’s read: the next stablecoin wave is B2B, not remittances — “it’s Toyota sending money to their supplier in China” — and Ripple is buying its way into that game.

3. The Kim Jong Un fade: sold optionality is the trade

• Avi’s signature analogy, as told: as a dollar-yen trader he watched the yen nuke every time Kim Jong Un tested a missile — “concerned Japanese people looking at large television screens” — and move less each time, until by the 15th test the market said “show me the freaking nuclear war and I’ll sell off again.” He sold options into every one and “it was easy.”
• Crypto is running the same pattern with tariff headlines: “Trump is like, ‘100% tariffs on China,’ and the market sells off a little bit less the second time. Sell all the optionality you can, which basically means buy Bitcoin when it pukes because of something that’s obviously not going to result in the end of global commerce.” His verdict on the chop: “the easiest trade I’ve seen in crypto in a while.”

4. Who’s actually selling: the class of 2017’s PTSD

• Avi’s diagnosis of the supply beyond OGs: people who went full-time in 2017, didn’t sell in ‘17 or ‘21, rode it down, and now think “I should be worth more than $10 million at this point.” He cites an old Kobe line — nobody knows what anyone on Crypto Twitter is worth, but they’re always off by 10x, “mostly overestimating”: “that guy must be worth 800 million — maybe 20 million.”
• Avi’s mechanism: after FTX zeroed people, survivors who are up big “want to lock it in,” and sideways markets kill the greed that keeps people in — “you haven’t made any real money in three months… okay, let me get out. I think that’s a lot of what’s happening right now and why we’re not going higher.” Implication: once they’re out, the resistance clears.
• Avi’s proudest call, told as credential: in ‘21 he predicted no blow-off top — “a rounded top” — because bigger players had entered; he exited when momentum broke and went fully out when the Fed raised.

5. Robinhood and the picks-and-shovels arb

• Jonah’s live dilemma: Robinhood bought at $20-30, now $135, his best investment of the year — and he believes Robinhood, with Coinbase, “will one day overtake Goldman, JP Morgan.” Jonah agrees “100%” and prescribes a process, not a call: sell 10% and see how you feel — “if it feels great, do more. If you feel stupid or FOMO-y, stop and don’t touch it.”
• Avi’s regime call: the old strategy — long Bitcoin plus hyped shitcoins on rallies — “doesn’t work anymore.” The paradigm has shifted; crypto is in a “25-year grind higher,” so own picks-and-shovels that collect fees on people “fooling around in crypto.”
• The structural edge, spelled out: sell-side analysts “get fired” for bold calls and anchor to each other’s estimates, so a crypto-native retail investor with a merely reasonable long-term thesis sits “way above the incentive structure of the equity analysis industry. That’s your arb.” — “Robinhood is an amazing brand. It’s going to 10X over the next 10 years. The people that study Robinhood can’t even freaking comprehend that.”
• Avi’s complementary filter from the ~$10-20B liquidation day: the crash was “a forcing function to look at your portfolio” — if this went down 70%, am I a buyer? What failed that test, he dumped.

6. Portfolio mechanics and the Costanza rule

• Avi opened his book: largest position Nasdaq, then solar and gold miners (sold literally that morning, ~3% off the highs, after they roughly doubled), making Robinhood now his second-largest; plus Tesla and rare-earth miners. Why miners over gold: “crazy leverage that’s non-liquidatable,” and cash flows mean gold sideways still prints 13-14% — he bought during the $3,000-3,300 consolidation triangle, not fearing collapse.
• The psychology lesson, culminating in Avi’s Costanza rule: green fills your brain with dopamine and false safety; red does the reverse — “the reality could not be further from the truth… you need your dopamine to be produced when you buy when something is going against you. You do the exact opposite of what your body naturally does.” Applied to the flash crash: “nothing on my 3, 6, 12, or 18-month outlook has changed. So I like it better now.” Both admit they still chase breakouts sometimes — “you got to train your psychology. It’s so hard.”

7. Two real altcoins, prediction-market alpha, and a December short

• Jordan’s altcoin book is two names: Aerodrome and Hyperliquid — “the only two defensible products with attractive tokenomics that I can wrap my head around… every other altcoin is just a meme. And the meme era is dead.” He rebought HYPE at 35 on the crash after selling at 45 (“I feel naked… kicking myself when it traded up to 58”). Jordan also holds Shuffle (~$400-450M valuation, “printing money” and returning it) and Syrup over Aave on risk-reward — “don’t bet against Sid Powell.”
• Free money in prediction markets, as given away on air: picking “no” on every will-Trump-say-it market averaged ~13% returns vs. a 20% loss on “yes”, since ~71% of Polymarket markets resolve no — if you’re there to bet Trump says something, you’re over-indexed on him saying it. Plus: plug markets into ChatGPT deep research with live search to re-price odds, and Hebrew Telegram channels front-run English coverage of Israel headlines by 3-4 minutes.
• Structural flow: the big beautiful bill cut sports-loss write-offs from 100% to 90%, moving a winning bettor’s effective odds from roughly 49-51 to 44-56 (numbers “made up a little bit”), so capital is migrating from DraftKings and FanDuel to Polymarket and Kalshi.
• Last trade on the way out: crypto’s missing wash trading rule means VCs dump losers into year-end and rebuy — Avi’s Solana entry came when it fell $15 to $9 on December 30th on likely tax-loss flow. Jonah’s corollary: “look at the things that are down and short them on December 30th” — though he doubts “the WIF holders are smart enough to be doing tax loss.”