Bitcoin "got smoked" but is it just a shakeout?... private credit could be the next major market disruption – Louis Navellier sounds off... where Louis is buying today... is the wealth effect unwinding? VIEW IN BROWSER
Crypto got smoked last week. That’s the quick recap from our crypto expert, Luke Lango, editor of Ultimate Crypto, in his weekend update. The pain continues as I write on Tuesday. Earlier today, the grandaddy crypto dropped below $90,000, its lowest level since April’s “Liberation Day” fallout (it’s back up to $92,000 as I write). According to Luke, the biggest red flag for investors is how Bitcoin has fallen below its 50-week moving average, “a level that, in past cycles, has often marked the end of the party.” Excluding the COVID anomaly, every meaningful break-and-close below the 50-week moving average with the slope rolling over has marked the end of a boom cycle. But while recent price action points toward a new bear market, Luke presents an alternative, more hopeful readthrough: Pull the camera back and you see something different: this wasn’t a fundamentals event. It was a flows event. - Traders de-risked into big macro catalysts (CPI, Fed path, Treasury issuance).
- Systematic and momentum strategies sold because key levels broke.
- Levered longs got auto-liquidated into thin order books.
That cocktail always feels existential in the moment. It’s also exactly how mid-cycle resets usually look. Why the loss of the 50-week MA might not be a death knell this time around Luke suggests that a dip below the 50-week MA being a harbinger of doom may not be as accurate today because the structure of Bitcoin ownership and trading has fundamentally changed. Whereas Bitcoin’s cycle used to reflect… - Retail-heavy, ETF-less market
- One massive blow-off top
- A long, brutal selloff
Compare that to today, when: - ETF and institutional flows matter more than activity from retail investors
- Illiquidity is much higher because of this greater institutional ownership
- We had a cycle where on-chain “top signals” never fired
Back to Luke for the takeaway: In short, we may be trying to apply an old-world heuristic to a new-world regime. That doesn’t mean the 50-week break is meaningless. It does mean we should treat it as: A major risk signal, not an automatic “cycle is over” siren. So, what's the action step for crypto investors now? Caution. Luke tells crypto investors not to aggressively add to any positions – and especially not with leverage. We must respect today’s broken trend and technical weakness. But he advises not to go full bear: We are not in “sell everything, go to cash, never speak of this again” territory. But if weakness remains, when will “full bear” be appropriate? Luke points toward four structural signals breaking at the same time: - Bitcoin fails to reclaim its 50-week MA, forms a clear lower-high/lower-low pattern on the weekly chart, then eventually loses its 200-week moving average...
- On-chain “top” indicators finally hit euphoric extremes, long-term holders dump into weakness, and ETF flows turn persistently negative for months…
- We get a multi-month trend of new outflow from ETFs and institutions
- The overall narrative/story around Bitcoin changes (like the U.S. government turning into a regulatory foe)
If these signals materialize, Luke says the playbook shifts to capital preservation: stick with only what you’re truly willing to hold through a secular downtrend. We’ll continue tracking this and report back. Speaking of systemic risks worth watching… “The next big crisis in the financial markets is going to be private credit.” So says “Bond King” Jeffrey Gunlach, CEO of DoubleLine Capital. In a recent CNBC interview, Gundlach said that while many assets are wildly overpriced, the real trouble spot isn’t flashy AI stocks – it’s the rapidly ballooning private-credit market. If this sounds familiar, it’s because we’ve highlighted this growing risk in the Digest several times over the last year. Gundlach’s comments only add more weight to the fault lines we’ve been tracking. To make sure we’re all on the same page, “private credit” refers to loans made outside the traditional banking system. After regulators tightened lending standards in the aftermath of the 2008 financial crisis, non-bank lenders stepped in – and the industry exploded from roughly $300 billion in 2010 to trillions today. For borrowers, private credit offers flexibility when banks say no. For lenders, it promises high yields – often around 10% to 11%. But those juicy payouts come with a catch: leverage. As legendary investor Louis Navellier has repeatedly cautioned, many private-credit players are stacking leverage on top of already leveraged borrowers. That’s a dangerous recipe that we’ve seen before. We're beginning to see the cracks Bloomberg recently noted that over 40% of private-credit borrowers ended 2024 with negative free cash flow, a sharp increase from 2021. Meanwhile, two recent bankruptcies – First Brands and Tricolor – have already forced portions of Wall Street to pull back. Last month, JPMorgan CEO Jamie Dimon summed it up bluntly: When you see one cockroach, there are probably more. Gundlach just echoed that same fear. He warned that lenders are making “garbage loans,” just like the pre-2008 subprime era, and he’s especially concerned about the push to package these loans and sell them to retail investors who expect easy withdrawals from fundamentally illiquid assets. If redemptions surge, these funds could be forced into fire-sale losses. Yesterday brought a very concrete example of how this risk is already manifesting In our June 12, 2025, Digest, I profiled the risks in the private credit sector and highlighted Blue Owl (OWL) as a stock that deserved close scrutiny due to its significant exposure to private credit lending. OWL is now down 29% since that Digest. For part of the reason why, let’s jump to this story yesterday from Bloomberg: Blue Owl Capital Inc.’s shares have fallen to their lowest level since December 2023, after the alternative asset manager restricted investors from redeeming capital from one of its oldest private credit funds… In short: A fund with substantial private-credit exposure (via Blue Owl) is now limiting liquidity (no redemptions) and asking investors to take a haircut by converting into a vehicle whose shares already trade at a meaningful discount. For more, let’s go to Louis’ Growth Investor Flash Alert from this morning: Blue Owl has frozen redemptions on one of their private credit funds. I’ve been warning about this for some time. They have one fund open and one fund closed. This is causing a lot of concerns… This private credit issue could cause the Federal Reserve to cut up to a full percent. It’s a serious thing because the private credit industry works with the banking industry. To be clear, we’re not calling for an imminent or wider blow-up. But risks are growing, and as the private-credit machine grows bigger, the more significant the potential ripple effects across the economy. We’ll dive deeper into the biggest potential ripple of all – private credit and the AI buildout in tomorrow’s Digest. But for now, let’s move on to a sector that Louis is very bullish on today… Louis adds another gold miner to his Accelerated Profits portfolio If you’re less familiar, in Accelerated Profits, Louis zeroes in on high-growth stocks poised for rapid price appreciation. He uses his proprietary stock-rating system to focus on top-tier stocks exhibiting exceptional fundamentals and strong momentum. Louis has had 11 gold-related stocks on his Accelerated Profits “Buy List” recently. And yesterday, he added the twelfth. I can’t reveal the specific stock, but here’s Louis’ logic from his Buy Alert: Over the past few weeks, gold prices have consolidated after setting new all-time highs. Given the more than 50% run in gold prices this year, some consolidation was necessary – but I think the dip is setting gold up for its next leg higher. In fact, I was recently asked where I see the price of physical gold over the next two to five years. The simple answer is: Up to new record highs. Louis goes on to highlight his favorite economist, Ed Yardeni, who recently referred to gold as the new Bitcoin. The idea is that while Bitcoin was recently attracting significant investor interest as a safe haven amid geopolitical uncertainty, gold has regained its preeminence in that role (which it held for centuries, long before Bitcoin arrived). By the way, Yardeni predicts gold will hit $5,000 per ounce within a year – and could potentially breach $10,000 by the end of the decade. Bottom line: If you’re underweight gold, you might want to reconsider. For more on how to access Louis’ specific gold plays in Accelerated Profits, click here. Before we sign off... In last Wednesday’s Digest, I argued that confidence has quietly become the critical fuel of today’s brokerage-led economy. If people feel richer thanks to AI-goosed portfolios, they’ll feel confident and spend more due to the wealth effect…but if that wealth effect reverses, the entire loop can unwind just as quickly. This is why a new chart from predictive-markets platform Kalshi on Saturday caught my eye… Kalshi reported that searches for “AI bubble” have just hit an all-time high – a spike you’ll see in the chart below.  Source: Kalshi In a market dependent on sentiment, what investors feel (and fear) is nearly as important as fundamentals. So, if enough investors begin to believe we’re in a bubble that is bursting, whether that belief is accurate becomes almost irrelevant. The mere expectation of a downturn can trigger selling…which lowers asset values…which slows spending among upper-K households…which pressures earnings…which ultimately pushes stocks lower still. It’s the exact feedback loop we warned about – the wealth spiral in reverse. I’m not saying this is happening yet. But moments like this remind us how quickly what seemed strong and bullish can become fragile and bearish. And in a Reflexive Economy (as I called it in last week’s Digest), shifts in narrative can matter just as much as shifts in numbers. We’ll keep you updated on all these stories here in the Digest. Have a good evening, Jeff Remsburg | 
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