Keep Your (Crypto) Composure

Crypto: Keep Calm and Carry On

“Everyone’s screaming, ‘It’s over,’” says Paradigm’s resident crypto evangelist James Altucher.

“In the past week, over $1.5 billion in long [positions] got vaporized — about 400,000 traders wiped out in hours,” he posted yesterday on the Paradigm Press mobile app.

As we write this morning, Bitcoin trades at its lowest levels all month — just over $109,000. Ethereum has cracked below $4,000 for the first time since early August.

Here’s the thing, however: “Shakeouts like this never happen at the top or the bottom,” James says.

“They happen on the climb, when you’re fat, happy and convinced you’re safe. 2017? Bitcoin dropped 30–40% again and again — on the way up. 2021? A 53% nuke in May, then a sprint to $69K.”

James’ crypto analyst Chris Campbell elaborates: “At the top, you see spot selling, ETF outflows, panic from the big money. That’s not what I’m seeing. Here, ETFs keep taking in boatloads of cash. Stablecoin supply is staying strong.

“Some say this is the end of the party. We say this is the bouncer clearing out the day drunks.”

In markets, there’s a saying about “the shakeout before the breakout.” That’s where James and Chris say we are now.

“So what am I doing? Nothing. No panic selling. No revenge trades,” James continues.

“Nothing is harder. Nothing is smarter. Because crypto isn’t speculation anymore. It’s infrastructure. Stablecoins move more money than Visa. BlackRock’s here. Fidelity’s here. The rails are being laid, and they don’t go backward.

“Markets are waves. Shakeouts are undertows. If you thrash, you drown. Just float.”

Besides, James is convinced the catalyst for the next crypto rally is right around the corner — as soon as Donald Trump signs new legislation no later than next Tuesday. “I believe it will unleash the biggest crypto innovation ever,” says James.

As he sees it, crypto innovation moves in waves. There’ve been three of them so far. “And in every single case,” he says, “investors had a chance to pocket some astronomical gains.” For example…

• Dash turned a $1,000 investment into $130,000
• Stellar turned a $1,000 stake into nearly $500,000
• NEO skyrocketed in less than a year, transforming $1,000 into a $1.7 million fortune.

That’s what James says is on offer again as Trump prepares to sign new legislation.

Readers of James’ Early-Stage Crypto Investor are already up to speed on what’s happening — and making their moves with his top five picks. If you’re not among them yet, click here and James will show you why time is of the essence.

Works Every Time

Eye-opening statistic: On 16 occasions over the decades, the Federal Reserve cut short-term interest rates even while the stock market was trading near all-time highs.

The most recent time was last week.

“Each time, the result was the same,” says Paradigm trading pro Enrique Abeyta: “The stock market continued to rise over the following year. On average, the S&P 500 has gone on to post a return of nearly +15% one year later.”

Enrique expects this time will be no exception. In fact, he’s getting vibes from the dot-com bubble of 1999.

“Today’s market reminds me of another time that the Fed was cutting interest rates relatively close to all-time stock market highs — late 1998.”

The Fed was moving quickly to contain the damage from the hedge fund Long Term Capital Management. It was cutting rates “right as we were in the middle of a massive capital expenditure ramp-up to build the technology infrastructure for the initial rollout of the internet and broadband,” Enrique writes at our sister e-letter Truth & Trends.

What’s happening as the Fed is cutting rates now? A massive build in AI infrastructure.

Yes, it’s destined to end in tears, as the technology buildout did in 2000. Enrique has been warning as much for months now.

But a new Fed rate-cutting cycle will postpone that day of reckoning.

“When people ask me what the craziest market environment I have ever seen is,” says Enrique, ‘I tell them it’s not the Global Financial Crisis, COVID or even Sept. 11. It is the 1999 melt-up in the Nasdaq.

“The combination of falling rates and soaring tech spending created one of the most explosive bull markets in history.

“The same forces are building again today. Whether you call it a ‘melt-up’ or simply a runaway rally, the lesson is the same: Fight the Fed at your own peril.”

The latest inflation numbers are reinforcing expectations the Fed will cut rates again at the end of October.

The Commerce Department is out this morning with “core PCE” — the Fed’s preferred measure of inflation. It came in as expected — up 2.9% year-over-year.

The number has been stuck in a channel between 2.6–3% since the spring of 2024. It’s nowhere near the Fed’s 2% inflation target, but the Fed seems to have given up on meeting that target.

As such, futures traders are pricing in an 86% probability the Fed will cut again at its next meeting on Oct. 29 — from 4.25% to 4%.

Mr. Market initially reacted to the inflation figures with euphoria — but as the day wears on, the high is wearing off.

At last check the S&P 500 is up barely from yesterday’s close at 6,608. The Dow is modestly in the green, the Nasdaq slightly in the red.

Gold is testing records once more at $3,779 but the big story in precious metals is still silver — blasting past $45 to set another highest-since-2011 level. The mining stocks are looking stout, too — the HUI index over 600 for the first time since 2011.

Don’t look now but crude is on track for its highest weekly close since July — a barrel of West Texas Intermediate up 1.3% on the day at $65.85.

Staying in the oil patch for Bullet No. 3…

Oil Executives: “Help!”

The president wants low oil prices. He also wants higher U.S. oil production. Energy industry bigwigs in Texas say he can’t have both.

Every quarter, the Federal Reserve Bank of Dallas conducts a survey of energy businesses in its territory — Texas and parts of Louisiana and New Mexico.

The current edition finds drilling activity contracting 6.5% during the third quarter of 2025 — on top of an 8.1% drop the previous quarter.

More revealing, though, is this: Executives took the opportunity to pour out their frustrations with the Trump administration — steep tariffs on imported steel and aluminum, rules that change from week to week.

“The noise and chaos is deafening!” said one exec at an exploration-and-production firm. “Who wants to make a business decision in this unstable environment?”

Another complained that the government “operates with little understanding of shale economics. They’ve effectively aligned with OPEC — using supply tactics to push prices below economic thresholds, kneecapping U.S. producers in the process.”

In general, survey respondents say they lose money at sub-$60 crude. So with the oil price spending most of the last six months between $60-68, they’re making money — but not much.

And they’re not optimistic going forward — expecting little change through year-end and a price of $67 come 2027.

“The administration is pushing for $40 per barrel,” said one exec. “Drilling is going to disappear.”

The Epstein Shutdown

Another “partial government shutdown” looks inevitable next week — but not for the reasons you might have seen from the mainstream.

The issue has been looming for months: Congress must pass a budget — or at least a temporary kick-the-can spending bill — by the end of the fiscal year. That’s Sept. 30, next Tuesday.

When last we visited this topic in mid-September, Democrats and Republicans were at an impasse over Obamacare subsidies. Congress expanded those subsidies in 2021, but now they’re on the verge of expiration.

Obamacare policies are so costly that 92% of the 24.3 million Americans who buy them rely on those subsidies. Democrats were digging in their heels — insisting the subsidies be maintained at current levels.

This morning’s Wall Street Journal has a yawner of a story about how the House passed a stopgap spending bill last week — lacking the Obamacare subsidies — that failed in the Senate.

“House leaders then announced they wouldn’t return to Washington until after the deadline, effectively telling Senate Democrats to take it or leave it.”

But hold on: In the predictions markets, the odds of a shutdown leaped dramatically this week only after a development seemingly unrelated to the federal budget.

On Wednesday, Rep. Thomas Massie (R-Kentucky) announced he’d racked up enough signatures for a “discharge petition” that would force a vote on full release of the Jeffrey Epstein files in the government’s possession.

While the Justice Department has released some files to the House Oversight Committee, many documents are missing and the ones present are heavily redacted. That’s not enough for Massie, who submitted an Epstein Files Transparency Act for Congress’ consideration in mid-July.

With Massie’s announcement Wednesday, House Speaker Mike Johnson sent the House home early, ahead of schedule — averting an Epstein vote.

It wasn’t the first time, either. On July 22, Johnson sent members home early for their summer break to forestall a vote on Epstein disclosure.

Looking at Polymarket this morning, the odds of a shutdown have grown to 80%. The only way to avert a shutdown is if the House returns to work — and at this time, the House isn’t scheduled to reconvene until Tuesday, Oct. 7.

Meanwhile, any action on Massie’s bill won’t come until late October…

Mailbag: Mafia Tactics and the FCC

“Great essay, Dave — well said and should be framed for current and future use,” says one of many replies to yesterday’s edition.

“There is only one word for the Sept. 25 column: Fantastic! Thank you so much for clarity of thought,” says another.

“Keep the facts and zingers coming. A daily great read,” says a third.

One reader, alas, missed the point: “Your article was read with deep disappointment!! Free speech should be limited to the expression of truth, NOT FANTASY!!!” Perhaps this individual aspires to a position in the U.S. government as commissar of truth?

“As a former broadcaster and reporter myself I don’t disagree with you about the mafia-like tactics and chilling effect Carr’s remarks could have on any broadcaster with a license to protect,” a reader writes. “Remember folks, each local station must show every few years it operates in the ‘public interest’ to keep that license and continue to broadcast.

[That’s a long wind-up to the inevitable “but.” Heh…]

“What I would like to observe, however, is that when the left pressured banks to not do business with President Trump (and they caved), pressured major social media outlets to even deplatform he and other conservatives like Glenn Beck, Dan Bongino and others, I somehow don’t recall the free speech-loving left having one thing to say about that.

“During COVID doctors were silenced and fired, and God forbid if you even mentioned alternative COVID treatments on any social platform!! Did these same people moan, whine and complain then? Nope. I also recall President Biden suggesting a Disinformation Governance Board in April 2022. What could possibly be wrong with that? The government deciding what is truth or not, LOL??? Our forefathers would have screamed — and then pulled out their pistols.

“The fact is Kimmel was NEVER muzzled. He could still speak his opinion. He had banking privileges and didn’t lose his social platforms (hmmm). Even lie if he so desired. But not using Disney’s resources, which they own!

“I agree with you that the government should under normal circumstances have no function as the arbiter of truth. Unfortunately, most of the major media (and just from my perspective as a former journalist) has a left-leaning bias. Ask former reporters like Sharyl Attkisson, Bernie Goldberg and Catherine Herridge about that. Or ask two papers like the Times and Post about their Pulitzer Prizes for reporting on the Russia/Trump story that turned out to be baloney. They have yet to give the prizes back. It’s why I and many others give the major media no credibility whatsoever. None.

“You either support free speech as outlined in our First Amendment or you don’t although these days I may add a caveat to that. When you use speech to incite people to violence you crossed over that fine line. And far too often these days we see that happening almost daily, especially from the left.”

Dave: Careful there.

Conservatives are getting way too comfortable with “incitement” as a pretext to squelch speech of which they disapprove. It started coming out after the attempt on Donald Trump’s life in July of 2024. But as I said less than 48 hours after the incident, this too cuts both ways.

God help us all if the courts start revisiting Brandenburg v. Ohio (1969), in which the Supreme Court held unanimously that…

The constitutional guarantees of free speech and free press do not permit a state to forbid or proscribe advocacy of the use of force or of law violation except where such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action.

“Imminent lawless action” is the standard. You can advocate violence in the abstract. You can’t stand with an angry mob outside someone’s house urging them to burn it down that moment.

It’s a standard that’s worked for over 50 years. Let’s stick to it.

Otherwise we’ll all be reduced to doing what my acquaintance Scott Horton, director of the Libertarian Institute, does on his podcast to avoid getting the banhammer from YouTube.

If he gets wound up about the rotten and evil actions of one or another public official, he won’t wish them violence, or that they be launched on a catapult toward the sun or whatever..

Instead he’ll conclude his rant with, “Gee, I hope he bangs his knee on a table real hard!”

Have a good weekend,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets