06 Feb 26' what is going on?
Is the world collapsing? Priced 'high probable black swans'
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Yesterday was a definitive day of capitulation in global markets, knowin the massive today bounced. BTC fell more than -14%, SILVER dropped nearly -20%, and GOLD declined almost -5%. The Saas software index is now down -25% YTD, with major equities like AMD, PLTR, and ORCL all suffering losses exceeding -25% YTD. This massive global washout, driven largely by the disruptive impact of claude code, challenges the evolutionary trajectory of Saas. The current landscape draws a striking parallel to the newspaper business in the 2000s, when digital newsletters went live and commoditized news.
‘Saaspocalypse’
Numerous reports are flagging this shift, with a Goldman Sach research note making this precise comparison. The “golden age of Saas” appears to be facing its “Gutenberg moment”. Just as newsletters were high-margin monopolies until the internet unbundled and destroyed their pricing power, Goldman Sachs notes that legacy software now faces an identical “unbundling”—a secular shift where software becomes a commodity, much like newsprint did two decades ago.
For the rational user and customer experience, particularly in B2B Saas, this logic holds true.
There is little incentive for a company to spend hundreds of thousands of dollars on a platform when they can hire a single developer or semi-technical operator to create internal software using AI tools. With a simple subscription, one can construct a web application that fulfills the majority of business needs. Even if a company chooses not to build internally, other founders can rapidly build competitive, sustainable software, leading to more competition and cheaper products.
However, certain software services will likely maintain their moat, specifically those that scale aggressively and improve their product for users who rely on the platform to survive—especially where users do not make money directly on top of the software. As I have noted before, photoshop and adobe creator possess significant moats. Similarly, Canva is another product where I do not foresee paid users migrating to cheaper versions, particularly if these platforms go all-in on servicing better AI products. Despite this defensibility, market valuations are suffering: Canva is expecting to IPO this year, yet ADBE is trading -18% YTD, -37% over one year, and -44.5% over five years. Microsoft is another entity unlikely to lose its moat, yet MSFT is down -15% YTD and -27.7% from peak to bottom, trading at a $400 price level with a PE of 24 and a forward PE of 20.7. In terms of multiples, we have literally returned to levels seen more than ten years ago.
Analyst always try to sign reasons to the collapse. Here’s mine: EA 6102; BTC to $1m
Analysts invariably attempt to assign reasons to asset collapses, and financial newsletters are currently pushing the crypto collapse narrative. While I cannot deny that sentiment is historically poor, it is widespread across multiple industries. Any news regarding AI is now priced as bad information; increased capex is bearish, and AI mentions in reports are bearish. In bitcoin related sentiment, Deutsch bank attributes this sentiment to the maturity of the asset class, suggesting Bitcoin is losing the “tinkerbell effect”—the era where price was sustained purely by speculative belief. They argue the asset is transitioning from a faith-based instrument into a “mature institutional asset”, a process marked by valuation resets and ETF outflows.
While the notion published by Deutsch bank sounds plausible, and while Bitcoin has indeed failed to act as “digital gold” recently, I believe the diagnosis of “maturity” is fundamentally incorrect. The collapse is not due to a change in Bitcoin’s fundamental quality as a future reserve asset. Rather, the shift is structural. Over the last two years, Bitcoin has moved from being traded solely on crypto products to being available to all players. The market structure now gives Bitcoin a clear edge as the selected asset to short. Bitcoin has a massive perp market with liquidity that no other asset possesses, and positive funding rates mean hedge funds can short Bitcoin to earn passive yield. Furthermore, because Bitcoin trades 24/7 in a world of constant geopolitical shocks, it sits at the right edge to be the selected asset to dump when bad news breaks after-hours. When this technical reality conflicts with the 4-year cycle theory held by OGs, these long-term holders massively dump Bitcoin to secure cash.
The primary driver of this short-term volatility is the geopolitical instability associated with the Trump administration, which prevents investors from sleeping without open shorts. We must be aware that the labor market is collapsing worldwide and monetary policy must expand. The true threat is not inflation, but deflation. In this environment, investors are fleeing to safety. While the gold rush is a clear source of security, history suggests this safety is not absolute. On April 5, 1933, President Roosevelt signed Executive Order 6102, confiscating gold within the continental United States. While I am not suggesting an exact repeat, a fiscal crisis could trigger similar emergency actions where centralized gold supplies are leveraged. Physical GOLD in an ETF format is subject to surveillance and centralized authority. In an emergency, physical gold is difficult to transport across borders, and ETF-based gold offers no escape from government pressure.
Bitcoin solves these problems. While it is traceable when moving to fiat, it is inherently portable. It lives on the web; if you run, your Bitcoin runs with you. It is the unique protection for the collapse of the rules-based order, international law, and the post-war order. To function as a true reserve asset, a store of value must not be connected to a deep state government or organization. Bitcoin unlocks the power of a reserve asset unattached to physical location—a proposition much bigger than gold, which cannot secure wealth in a “WW3” or multiplanetary survival scenario.
Trump that is now the problem. Will be solution later
Short-term, Trump has positioned the industry in a difficult spot, allowing his circle to extract value without providing utility, a sentiment that is becoming consensus within the crypto industry. However, facing political pressure and the need to secure mid-terms, the Trump administration must eventually fix this. I am pricing in a positive black swan from the administration, potentially in the form of a market structure bill. Trump needs a bull market to solve American problems and maintain power. Equities are too large to manipulate easily, but crypto is small enough to stimulate and print the green percentages he needs for campaigning.
What means to be a crypto person
Crypto markets possess key insights allowing them to exist in their own “wild west,” uncorrelated to equities. Crypto is an isolated market that does not depend on the products or services of “the real world”. Consequently, its business economics can survive even if the traditional economy falters. To understand this resilience, one must understand the crypto-native user. Inflows occur 99% of the time via centralized exchanges (CEX) where users convert fiat to USDC or USDT. From there, liquidity is split between CEX order books and decentralized exchanges (DEXs).
On a CEX, users simply buy spot. In the decentralized world, liquidity resides in pools. To navigate the fragmented pricing of these pools, users rely on aggregator DEXs like jupiter, 1inch, or cowswap. These platforms allow users to sign with their wallet and swap tokens, this platforms have their own algorithms to find the best execution price without the need for complex personal infrastructure. Beyond simple trading, crypto natives engage in staking. For Layer 1 tokens, users can utilize liquid staking protocols like lido to stake ETH, earning staking rewards to secure the network while receiving a wrapped token in return, again, no massive infrastructure or massive capital is required to earn staking rewards.
This creation of wrapped tokens unlocks extreme composability and financial engineering, especially valuable during black swan periods. A user can stake a token, receive a liquid wrapper, and use that wrapper as collateral on lending markets to borrow against it. This frictionless environment allows for the creation of 1-1 tokens attached to other assets, such as tokenized stocks. Furthermore, projects can attach tokens for their governance and attach business economics to the token, similar to equity, distributing value to token holders in format of revenue sharing, or to provide permissionless liquidity in AMMs to earn trading fees.
Ultimately, crypto unlocks a permissionless environment where ownership is absolute—represented by tokens or NFTs that quantify liquidity positions. This stands in stark contrast to the traditional financial world, where transferring stocks between brokers is complex, costly, and fraught with counterparty risk. The crypto world offers a superior experience for financial strategists, creating an atomic, fast, and cheap ecosystem. For this reason, within ten years, the entire world of finance will inevitably move onchain.