One of the most important articles we’ve ever written 👀

GM this is Milk Road PRO - the newsletter that is cutting right to the chase, cause this might be one of the most important articles we’ve written in a long time!

We’re sharing our new investment framework and portfolio allocation for each stage of the business cycle.

We believe this framework is key to capitalizing on opportunities within the crypto market.

Seriously. Put your seatbelts on, and get a good grip on the Jesus handle – cause things are about to get wild!

Let’s start with what we already know…

If you’ve been following Milk Road PRO then you know we’ve talked plenty about how liquidity cycles move the price of crypto – not the Bitcoin halving. 

Seen pretty clearly, here:

We’ve also talked about how the business cycle informs the liquidity cycle.

Point being: if you understand the business cycle, you understand the liquidity cycle, which means you understand the crypto market cycle. BOOM 💥

This is the backbone of our thesis that the current crypto bull market will continue into 2025.

But today, we are going to dive deeper into this theory, and build out an investment allocation framework based on the phases of the business cycle.

See, the business cycle has 4 distinct phases – and we think there is a pretty clear allocation strategy that will help us best capitalize on each phase. 

By utilising the framework we are about to share, you can protect your investments and improve your chances of investing in the right assets during the right times of the cycle. (I.e. Bitcoin, other majors, alts, stables).

One can always buy and hold long-term, but we believe this framework is the key to making even better returns throughout the cycle, while still staying exposed to crypto long-term.

And by the way, the business cycle doesn’t just apply to crypto. 

It has been moving financial markets for decades and decades long before crypto was invented – impacting real estate, stocks, commodities and more!

For today’s report, we’ll focus solely on how to allocate to crypto throughout the business cycle. But first, let’s start with a recap…

What The Heck Is The Business Cycle?

The business cycle is simply the growth of the world economy. 

As the global economy expands, assets tend to expand too. When the economy contracts, so too do its assets. 

It’s a fairly simple concept that is often missed or misunderstood by investors.

The best part about the business cycle is that it's predictable. While assets are not necessarily predictable, assets that are correlated to the business cycle, become predictable. 

And this is the basis of our investment framework.

The business cycle (aka the growth in the world economy) looks something like this.

It has repeated in this same cyclical nature for decades and decades before this, moving up and down, but in the long-term, always moving up and to the right in a secular trend. 

Of course, the business cycle is rarely a perfect trend as shown in the image, but when you zoom out it’s directionally correct.

The key to this framework is understanding the business cycle and investing in asset classes which are also in a secular trend - benefiting from the growing global economy.

The S&P 500 for example - aka the top 500 US companies - have been in a secular trend for more than a century, fueled by America’s innovation, capital and global influence. As the global economy grew, so too did US based companies.

Another example of a secular trend is the NASDAQ - aka technology stocks - with the invention of computers and the internet. 

As the global economy expands and more of that economy moves onto the internet, tech stocks and their market caps expand as well.

And finally, we have crypto in the early days of a secular trend of decentralized money and infrastructure. 

As the global economy expands and more of that economy moves onchain, so too does the market cap of crypto.

While each of these asset classes are in secular trends and look like they only go up and to the right, they of course have aggressive ups and downs along the way. 

These are the cyclical trends led by the business cycle.

Understanding these cyclical trends are where the opportunity lies.

Depending on where we are in the cyclical trend (aka the business cycle) will determine how much risk you should take (or not take) in a particular asset class.

Let’s take a second look at the stages of the business cycle.

The Stages Of The Business Cycle

As a reminder, the business cycle is simply the contraction and expansion of the global economy over time. 

There are 4 distinct stages of this cycle, though it’s never cut and dry as to which stage we are in as various countries can be in different parts of the cycle at different times.