Bitcoin Drops 15%, Briefly Breaking Below $61,000 as Sell-Off Intensifies
Bitcoin touched $60,000 this week. Down over 50% from the October highs above $126k. If you've been reading this roundup for any length of time, none of this surprises you. The asset that went up too fast on leverage and hype is now coming back down to earth, and the tourists are heading for the exits. Good riddance.
What's remarkable is the narrative shift. A few months ago, bitcoin was "digital gold" and the future of money. Now the same talking heads on CNBC are questioning crypto's "practical utility." These are the same people who told you to buy at $120k. The media's job is not to inform you — it's to sell advertising by manufacturing emotional reactions. They were cheerleaders on the way up and they'll be undertakers on the way down.
For those of us who have been through multiple cycles, the playbook hasn't changed. Spend less than you earn. Dollar cost average. Don't use leverage. Don't try to time it. The people who followed this approach are sleeping fine this week. The people who aped into leveraged bitcoin equities and 100x futures are learning expensive lessons about counterparty risk and the danger of treating a savings technology like a casino chip.
Bitcoin Slump Shakes Companies That Jumped on Crypto-Hoarding Bandwagon
I have been warning about this for months. These so-called "digital asset treasury" companies — Strategy chief among them — are not bitcoin. They are leveraged bitcoin equities with management fees, dilution risk, convertible debt, and all the counterparty risk that bitcoin was specifically designed to eliminate. Strategy's shares fell from $457 in July to $111 this week. That's a 75% drawdown. Bitcoin itself is down about 50% from highs. The leverage works both ways, and it always has.
The irony is rich. People bought these stocks because they were "afraid" of buying bitcoin directly, or couldn't be bothered to learn how self-custody works. So instead, they introduced a dozen layers of counterparty risk between themselves and the asset they were supposedly trying to own. Michael Saylor is not stupid, but the trade that made him a billionaire is now threatening to unmake his company. When you issue billions in convertible debt to buy a volatile asset, you better hope the music doesn't stop. The music stopped.
If you want bitcoin exposure, buy bitcoin. Hold your own keys. It's not complicated. Everything else is a derivative, and derivatives blow up.
Gold Plunges 9% in Worst Single-Day Drop Since 1983, Silver Crashes 35%
Gold went from $5,390 to $4,895 in a single session. Silver dropped 35% intraday. Combined, roughly $7 trillion in market value evaporated in one day. The catalyst was apparently the Warsh nomination, which the market interpreted as hawkish, but the real story is the leverage and speculation that had built up in precious metals over the past year. Gold was up 96% in twelve months. Silver was up 278%. Those are not "safe haven" moves — those are speculative manias.
Now, I am a hard asset guy. I love gold. Gold has been the honest thermometer of monetary debasement since 1971 when Nixon "temporarily" suspended the gold standard. But even honest thermometers can get overheated when speculators pile in with borrowed money. What happened on January 30th was a forced liquidation event — margin calls cascading through a crowded trade.
The structural bull case for gold (and bitcoin) remains completely intact. Central banks are still buying. Governments are still running massive deficits. The money printer hasn't been turned off — it's just been temporarily paused. This correction, violent as it was, is healthy. It washes out the weak hands and the leveraged tourists. The fundamentals haven't changed one bit. The dollar is still being debased. $39 trillion in national debt doesn't care about one bad trading day.
Trump Nominates Kevin Warsh as Next Federal Reserve Chair
And just like that, Jerome Powell's days are numbered. Trump nominated Kevin Warsh on January 30th to succeed Powell when his term ends in May. The market's initial reaction was to dump risk assets — gold crashed, bitcoin sold off — because Warsh is perceived as more hawkish than the "marionette" I predicted Trump would install.
But let's think about this for a moment. Warsh is a Stanford guy, former Morgan Stanley banker, married into the Estée Lauder fortune. He served on the Fed board during the 2008 crisis. The tech right loves him. Andreessen called him a "fantastic choice." When Marc Andreessen and the populist right both agree on a Fed chair pick, you should probably pay attention.
Here's the thing: it doesn't matter who sits in that chair. The math doesn't change. $39 trillion in debt. $1.78 trillion annual deficits. Interest payments consuming an ever-larger share of the budget. The Fed chair can talk hawkish all day long, but when the Treasury needs to refinance trillions in debt at rates the government can't afford, the money printer goes brrr regardless of who's running it. The question isn't whether rates will be cut — it's when, and how aggressively. Warsh knows this. Trump knows this. The bond market knows this. Act accordingly.
Fed's Daly Sees Labor Market Vulnerabilities, Room to Cut Interest Rates
San Francisco Fed President Mary Daly said this week that one or two more rate cuts may be needed, noting that workers are "walking a knife's edge." She voted to hold rates at 3.50%-3.75% last week but admitted you could "make a case for going ahead and taking a little more off."
Translation: the labor market is weaker than the headline numbers suggest, inflation is still above target at 3%, and the Fed is stuck. They can't raise rates because the economy would collapse under the weight of its own debt. They can't cut rates aggressively because inflation hasn't cooperated. So they sit there, paralyzed, while the real economy deteriorates underneath increasingly meaningless government statistics.
Daly's most telling comment was about new graduates struggling to find jobs as a "leading indicator." She's right. When the entry-level pipeline dries up, it means businesses aren't investing in future growth. They're hunkering down. The "low-firing" labor market she describes is a precursor to actual firing, and when that wave hits, the Fed will cut rates whether inflation is at target or not. This is the playbook: wait until something breaks, then print. It has been the playbook since 2008. Bitcoin was designed for exactly this scenario.
Trump Misses Budget Deadline as National Debt Approaches $39 Trillion
The President was legally required to submit his FY2027 budget proposal on the first Monday in February. He didn't. No president has submitted a budget on time since 2015, which tells you everything you need to know about how seriously Washington takes fiscal responsibility.
The national debt is $38.5 trillion. The government ran a $1.78 trillion deficit last fiscal year. The Committee for a Responsible Federal Budget said it plainly: "If you don't budget, you can't govern." Meanwhile, Commerce Secretary Lutnick is at Davos telling reporters he expects 5-6% GDP growth. This is delusional. Most serious forecasters expect long-term growth under 2%.
The Founding Fathers designed a system with checks and balances specifically to prevent this kind of fiscal recklessness. They fought a revolution over taxation without representation. Today we have taxation without accountability, spending without budgeting, and borrowing without any intention of repaying. Every dollar of that $38.5 trillion in debt represents a claim on future labor — your labor, your children's labor. It is, in every meaningful sense, a form of servitude. And they won't even bother submitting a budget to tell you how they plan to spend the next trillion they borrow. Bitcoin fixes this.
US-India Trade Deal: Trump Slashes Tariffs to 18% as Modi Agrees to End Russian Oil Purchases
This is 3D checkers at its finest. Trump cuts Indian tariffs from 50% to 18%, and in exchange, Modi agrees to stop buying Russian oil and "BUY AMERICAN." On the surface, this looks like a win — lower tariffs, new export markets, and a geopolitical blow to Russia's revenue stream.
But peel back the layers and it gets more interesting. India was buying roughly 1.2 million barrels per day of Russian oil. That's cheap energy that fueled India's manufacturing boom. Now India has to buy American oil at a premium. This is not free trade — this is managed trade with geopolitical strings attached. The Kremlin, predictably, says India hasn't told them anything about stopping purchases.
The bigger picture is that the US is systematically using tariffs as a tool of foreign policy, not trade policy. The goal isn't balanced trade — it's geopolitical leverage. Make your allies dependent on American energy, American technology, American military hardware. It's an empire strategy dressed up in trade language. Whether it works depends on whether the rest of the world has alternatives. With bitcoin, the world has an alternative to dollar hegemony. It's just a matter of time before countries figure that out.
The Effects of Tariffs, One Year Into Trump's Trade Experiment
The New York Times published a one-year retrospective on Trump's tariff regime, and the verdict is mixed at best. Tariffs have been raised to levels not seen in a century. Pew Research shows Americans largely disapprove. Companies are beginning to pass costs through to consumers. The Tax Foundation estimates Section 232 tariffs will raise $490 billion over the next decade — but that estimate drops by $145 billion when you account for the negative economic effects.
Here's the fundamental problem with tariffs: they are a tax on imports, which means they are a tax on American consumers. The idea that China or India "pays" the tariff is economic illiteracy of the highest order. American importers pay the tariff, and they pass it on to you. A study found Americans have paid for 96% of tariff costs. Ninety-six percent.
Now, I understand the strategic argument for tariffs — reshoring supply chains, national security, reducing dependence on adversaries. These are real concerns. But let's be honest about what's happening: the government is making things more expensive for Americans and calling it a win. This is the same government that can't submit a budget on time and has borrowed $38.5 trillion. The disease is fiat money and unlimited government spending. Tariffs are another symptom dressed up as a cure.
Bitcoin Mining Revenue Gauge Falls to Record Low as Miners Unplug Equipment
Bitcoin's hashprice — the revenue per unit of mining compute — has hit an all-time low. With bitcoin trading around $70,000 and the estimated production cost north of $87,000, most mining operations are now unprofitable. Miners are unplugging equipment and selling bitcoin reserves to cover operating expenses and debt service.
This is the beauty of bitcoin's difficulty adjustment in action. When price drops below production cost, marginal miners capitulate and shut down. Difficulty adjusts downward. The remaining miners become more profitable. The network keeps running. It's an elegant, self-correcting system that requires no central planner, no bailout, and no Federal Reserve to intervene.
Compare this to any other industry. When steel producers go underwater, they lobby Congress for tariffs. When banks get in trouble, they get bailouts. When airlines fail, the government writes checks. Bitcoin miners? They shut off their machines and wait. No moral hazard. No socialized losses. No too-big-to-fail. This is how a free market is supposed to work. The weak miners die, the strong survive, and the network emerges stronger. The people who understand this are not worried about the price today. They're accumulating.
Bitcoin ETFs See $6.18 Billion in Outflows Since November as Institutional Demand Reverses
The spot bitcoin ETFs that launched to such fanfare have now hemorrhaged over $6 billion in net outflows since November. The same institutions that were "accumulating" bitcoin on the way up are now dumping it on the way down. CryptoQuant says "institutional demand has reversed materially." Deutsche Bank says "traditional investors are losing interest."
I'm going to say something controversial: this is good news. The ETFs were always a double-edged sword. On one hand, they made bitcoin accessible to a wider audience. On the other hand, they introduced exactly the kind of institutional, momentum-chasing, risk-on/risk-off behavior that bitcoin was designed to be immune to. When hedge funds and pension allocators treat bitcoin like a tech stock, it trades like a tech stock.
The people selling their ETF shares this week don't understand what they own. They bought "bitcoin exposure" the same way they buy "emerging market exposure" — as a line item in a portfolio to be rebalanced quarterly. Bitcoin is not a portfolio allocation. It's a savings technology. It's an exit from the fiat monetary system. You don't sell your exit when the system starts showing cracks — that's precisely when you need it most. Let the institutions sell. I'll take their coins. The redistribution from weak hands to strong hands is a feature, not a bug.