🥛 What if we’re all wrong? 😰

GM. This is Milk Road, the crypto newsletter that feels like finding a $20 bill in your winter coat pocket. A small surprise that instantly makes your day better.

Here’s what we’ve got for you today:

✍️ What if we’re all wrong?
🎙️ The Milk Road Show: Bitcoin Is the Only Asset That Matters… Everything Else Is Garbage? w/ Charles Menke.
🍪 BTC short squeeze incoming?

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WHAT IF WE'RE ALL WRONG? 😰

Every Monday morning, the Milk Road research team hops on a call.

We argue. We disagree. Sometimes somebody's mic doesn't work and we just talk over each other like a family Zoom.

Starting today, we're letting you into the room.

No polished-after-the-fact analysis. Just the raw, honest takes from this morning's call.

And today? There was really only one topic.

Martin (our lead crypto analyst) said it best:

"Oil is everything that matters right now. All the targets, all the levels, everything else - just shut up and look at oil."

Source: TradingView

He's not wrong. The Strait of Hormuz (the narrow waterway between Iran and the Arabian Peninsula that roughly 15M barrels of oil flow through every single day) is still closed.

Oil pulled back about 9-10% today. Everything else bounced with it. But Thomas (our macro analyst) isn't buying the relief.

"Oil's just skewed to the upside until that strait opens. If oil keeps rising, stocks keep falling. It's really as simple as that."

We’ve seen some analysts outside of Milk Road pointing to G7 countries tapping their strategic petroleum reserves (emergency oil stockpiles governments keep for exactly this kind of scenario).

But those releases only cover about 1-2M barrels per day.

Against the 15M barrels that normally flow through the strait, it’s essentially a garden hose aimed at a swimming pool.

Source: 20min

So what are we actually doing about it?

This is where it gets interesting - because the team is split.

Martin cut his exposure by roughly 50% and moved into USDS, a stablecoin that earns yield through Sky Savings. Think of it like parking your cash in a high-interest savings account while the storm passes.

(If you want to know what assets he sold, and which ones he held onto - go PRO All Access.)

Thomas, on the other hand, is sitting out entirely.

He wants to see growth indicators improve before stepping back in. "Even if I'm wrong and I timed the exact bottom, I just can't see how I can call it until the strait's open."

John (our onchain and macro strategist) is patient. Bitcoin's stuck in what he called "an indecision channel" - it either drops to $60k or pushes up to test $85k. He's staying calm and simply watching for now.

Three analysts, three different moves, with one thing being clear:

Nobody has a playbook for this (inside or outside of Milk Road).

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WHAT IF WE'RE ALL WRONG? (P2) 😰

Tomas flagged something worth keeping a close eye on:

Treasury yields (interest rates on U.S. government debt) relative to oil.

Right now, yields are rising with oil - meaning the market's biggest fear is inflation. But if oil stays elevated and yields start falling? The fear shifts from inflation to recession.

That’s when things get "really bad," according to Tomas.

And this week will tell us a lot.

Five major central banks are making rate decisions - Australia on Tuesday, the U.S. Fed on Wednesday, then the European Central Bank, Bank of England, and Bank of Japan all on Thursday.

Markets are pricing in rate hikes from Europe and the UK, while expecting no rate changes from the U.S.:

Source: CMEgroup

But as Thomas put it, "hiking interest rates isn't going to stop the oil price from going up. It doesn't solve the situation, just makes it worse".

You can't hike your way out of a closed shipping lane.

So the thing to watch isn't the decision - it's the tone. If central bankers sound more worried about growth than inflation, the recession trade accelerates.

John went one layer deeper, and ten layers scarier...

If oil pushes above $120 and stays there, things start breaking. At $150? Fertilizer disruption. Food scarcity. "A non-zero risk of serious global economic collapse."

Heavy words. But - importantly - not his base case. "Every nation everywhere knows this. Even countries that hate each other might work together because it actually matters that much."

Meanwhile, crypto is finding pockets of life in the fog - hell, Ethereum and Bitcoin are up ~16% and ~10% respectively since the Iran conflict began:

Source: TradingView

So here's where we land:

Martin sold 50% of his portfolio and is earning yield on his cash. Thomas is out, waiting for the data to turn. John is patiently watching for catalysts.

All three think oil is the only variable that matters right now, so that’s what we’ll be watching this week.

(You should too.)

We'll be back in the room next Monday.

… and (as long as you like these kinds of articles) we'll keep telling you what we see.

While we’re on that note…