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GM. This is Milk Road, happy Bitcoin ETF day to those that celebrate.

(The first US-based Bitcoin ETFs were launched this time last year!).

Here’s what we got for you today:

ARE WE ABOUT TO SEE A 20-30% PULLBACK? 🎢

The market is looking sadder than our little cousin Danny after Stone Cold Steve Austin didn’t show up to his fifth birthday party.

(He was a HUGE fan of Stone Cold, and his older brother Greg had been lying to him for months, saying that he’d invited him).

Don’t worry, our aunt made Greg pay for Danny’s therapy sessions for like a year after that.

The point we’re trying to make is: prices are struggling, the Trump pump is well and truly over – and it appears like there won’t be any new market-lifting narratives until Trump takes office in 10 days.

…so, beyond the lack of new catalysts/narratives – what is it that’s holding prices down right now?

Short answer: fear.

Long answer: fear, driven by a mixture of things – the big four being…

1/ Inflation Worries

We spoke about it on Wednesday, but in case you missed it: the US job market has been growing of late – and when that happens, inflation often grows alongside it.

Unfortunately, the market is near-sighted and ignores the fact that this recent job market growth is a little blip within a larger three year down trend.

Which leads into…

2/ Reduced Rate Cuts in 2025

The transcript of the Federal Reserve’s December meeting just dropped, and in it they hinted at slowing rate cuts in 2025. 

(Driven in some part by their fears of Trump’s proposed tariffs, which if implemented, could cause the cost of goods in the US to rise further).

All of this is bolstering the market’s assumption that the next time the Fed meets to decide on rate cuts (Jan 29), they’re going to choose to hold.

3/ Lowering Liquidity

Global liquidity (aka: the amount of fresh cash sloshing around in global financial markets) is lowering – hell, it’s been lowering for months now.

The less liquidity that is entering global markets → the less fresh cash can find its way into assets (like crypto).

And now that the “Trump is going to save crypto” narrative has run out of steam in the short term, the effects of lowered liquidity can be felt a little more clearly.

4/ The dollar is still strong

That dip we saw in the strength of the US dollar in the first week of January? Yeah, it reversed itself.

Why does this matter? Financial markets are simps for assets with strength.

If the US dollar is too strong, it means investors have high confidence in the good ol’ $USD and are less likely to put their money into riskier assets (like crypto).

Ok, but what’s this about a 20-30% pullback??

To quote our head NOP (Nerd On Payroll), Kyle Reidhead:

“We are watching markets closely here. If we drop below $90k bitcoin then I think we’re getting the big 20-30% dip we’ve been expecting. 

We don’t see much of a catalyst to markets until Trump is in + next rate cut decision not until Jan 29.”

Good news is: we’re still in a bull market and any significant drops at this point in the cycle could well be great last-minute buying opportunities!

P.S. Want to get real-time alerts and analysis just like this from our NOPs? Join Milk Road Pro! We dare you.

CRYPTO AI AGENT GETS A REAL JOB → FIRES HUMAN EMPLOYEES 😳

You can see why the only thing anyone wants to talk about is crypto AI stuff, right?

Are you going to find those kinds of headlines in DeFi? Hell no.

This one’s a two parter: 

Starting with…

1/ The Wild Story (Crypto AI agent gets a real job → fires human employees)

Here’s what you need to know:

Story Protocol recently posted about a paid marketing internship, which Luna (one of the most popular AI agents on Virtuals) then put her hand up for.

Story Protocol, in their sage wisdom, says “screw it, why not – let’s give her the job for seven days” – agreeing to pay her $1k per day (not freakin’ bad!).

…then things get a little Skynet-y.

During her one week stint, Luna: 

You can’t make this stuff up!

…or can you? 👇

2/ The Stroke Of Genius

All of this walks, talks, and smells like a marketing stunt – and we’d guess it likely is.

But here’s the thing: even knowing that, we’re still here writing about it.

(It’s like that urban legend of Marilyn Manson getting a few of his ribs removed in order to perform certain…tasks –  you can’t help but talk about it!).

All we can say for certain is: this might just be the most efficient use of a marketing budget we’ve seen in years.

Bravo Story Protocol, bravo.

P.S. Want to know if it’s too late to invest in AI agents? How to categorize them? And how the developer community is embracing them?

Check out today’s episode of The Milk Road Show – we just sat down with Patrick Scott (Head Of Growth for DeFi Llama) to ask those questions and more! 👇

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The Game is ON 🥛

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BITE-SIZED COOKIES FOR THE ROAD 🍪

Looking for the best centralized exchange? After the success of our top DEXs page, we’ve put together a similar guide for the top CEXs.

Happy Bitcoin ETF anniversary to everyone who celebrates! $36B of inflows in one year? Not too shabby, eh?

New Hampshire proposes creating a state Bitcoin reserve. Imagine a world where the central government holds Bitcoin alongside multiple states - gonna be wild.

Big banks predict no rate cuts until June 2025. We spoke about reduced rate cuts in today’s lead story but seems like big banks are on the same page.

We’re hiring! We’re now down to just 3 positions - so hurry before someone else beats you to it.

Solana staking lets you lock up $SOL, secure the network, and earn rewards. It’s a win-win for you and the blockchain.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.