← The Wolf Of All Streets
The Wolf Of All Streets
$400M Whale Short Profits as Liquidation Hunt Fails! | Crypto Town Hall
01:03:27
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- [00:01]
Scott Melker
Well, good morning everybody. Hopefully Spaces is working. Welcome to Crypto Town Hall. As everyone knows, I am subbing for Scott Melker this morning, so I may be a little bit more snarky, but you know, the same basic idea. You know, we had an interesting weekend this weekend. We had First Friday, everyone staring at their screens at 8:00 Eastern Time, you know, as UTC flipped from one day to the next because of a prediction by a guy named Josh that says if bitcoin is at 84,000 exactly, it's going to go to 444,000 by July. Which is odd and it's amazing however, how many people I talked to over the weekend when I made the joke about it, everybody knew about it and so it really was funny. At the same time we had a hyper liquid 40x trader that everyone was staring at saying oh, we could be able to short squeeze them, etc. There was no short squeeze and he's basically been right. And whether he scalped or not, we don't know. But it's amazing the stuff that people are looking at in this market. But good morning everyone. Anybody have anything they'd like to lead off with? Because you know, it seems like we have yet another soft ish morning as far as bitcoin is concerned and crypto in general, but nothing major. Markets are kind of, you know, waiting to see what's going to happen with liquidity, waiting to see what's happening with the narratives. And you know, all the metrics are still saying fear, maybe not extreme fear anymore and the technicians are all still pretty negative. So, you know, Dan, why don't you take it away?
- [01:36]
Dan
No, I just wanted to chime in saying that he was right. I think maybe he was right, but.
- [01:41]
Scott Melker
He wasn't entirely right.
- [01:42]
Dan
He had to post more capital. Right, as opposed to more margin.
- [01:46]
Scott Melker
Oh yeah, absolutely. And you know, look right, wrong or indifferent. The technical traders have been mostly in charge, although I think most the consensus about a week ago was that we would see the low 70s and we're still sitting at 82, well, almost 83. You know, the market's kind of hanging out here. I always make the point that it's like coiled springs when this sort of thing happens. You know, Andrew, I see you up here, I know that you're of like mind to me that liquidity is the only thing that's going to really matter in the short run, but in the longer term that there's a lot of tailwinds that, that most of the traders are effectively ignoring inside the crypto sphere.
- [02:26]
Andrew
Yeah, I think there is a coiled spring effect that in the short term may or may not avail itself, but in the, let's call it midterm. So over the next six to seven months, we'll be able to point to, and I'll make sure that I point to it when it happens, that there will be a move higher and whether we like it or not, not that that move higher over a six to nine month period is already kind of programmed because, you know, there, there are now, you know, participants in the market who don't get in the market to, to make a, you know, $7. They get in the market to make enormous amounts of capital and, and to make the enormous amounts of capital based on the fact that they, you know, begin to have meaningful roles in controlling the, the movement of capital. And so the fact that, that, that that is a reality, you know, is, is, is it only bodes well for the upward movement of bitcoin. And the reason why it doesn't, it doesn't portend the downward movement of bitcoin because, you know, the case could be made volatility on either end of the scale is going to benefit a place like Citadel. Well, downside volatility and significant downside volatility may benefit a place like that in the very, very short term. It does not bode well for the long term because, you know, then nobody cares anymore and nobody's trading much. So those are, that's two ways to look at it. Also the, you know, the Friday deal with, with Josh Mandel, you know, the return of another, you know, bitcoin mystic, it never ceases to amaze. I've been around. I remember sitting next to a guy at the 2021 Bitcoin conference, which by the way was held like in June in Miami. So it was 9,000 degrees and 900,000 humidity. So I sat in the deep VIP whale area for three days and I literally didn't move. And there was a guy next to me that, you know, run a family office and advised people on, on bitcoin. And he, even back then, he's like, you know, every couple of years, you know, a new bitcoin Jesus arrives and inevitably, you know, they, they, they fade to the background. So, you know, there is a portion of, of the, the bitcoin ecosystem that, you know, finds, you know, bitcoin mysticism compelling. But at the same time, we to a point where bitcoin has become a meaningful part of the overall market space. By the way, on the, the flip side to the B, bitcoin mystic was your guy, Mr. Malone calling for 10,000 Bitcoin, which is equally absurd. So yeah, it's quite, it's been quite a, an interesting 72 hours. And you know, I've always been a proponent of there's best case scenario, there's worst case scenario. So, so Mandel's at best case, McGlone's at worst case. Reality almost always finds itself somewhere in the middle. And somewhere in the middle is 110 +k Bitcoin, which is, which is good for everybody here.
- [06:16]
Scott Melker
Well, a couple things, you know, first, Scott Besant actually called for $700,000 bitcoin. He's the Secretary of the Treasury. So, you know, so Josh actually not best case, he's sort of a middle case. It's kind of funny but, you know, Mike basically puts up a chart that has zero context, zero understanding of fundamentals. And it reminds me of one of my favorite ones, which was that for a while there, it was actually a long while, there was an incredibly high correlation, almost perfect between yak milk production in Tibet and the S&P 500. And so, you know, you can find, you know, with monkeys and typewriters you can find ridiculous correlations. The simple, you know, the truth of bitcoin. And you know, Simon, you know, I see you were up here. Oh yeah, you're still there. You know, you could talk about this chapter and verse is it's about adoption, it's about people believing in a store of value and it's about the entirety of the global financial system for Bitcoin. 10,000 in my mind is the same words as bitcoin goes to zero or there's a flash crash like the March of 2020. Those are the only two possibilities, right? 10,000 is just the way stat to it falling. It, it basically failing.
- [07:31]
Andrew
And you can, you know, FTX literally nuked the entire industry three years ago and Bitcoin dropped to 13 and change, right? Like, like crypto was borderline over at that point in the minds of everybody other than about half of the people on this call. So going underneath that, I can't imagine what level of hellscape we'd be in economically, both crypto and otherwise to get to that number. It's just, it makes no sense at all.
- [08:09]
Scott Melker
Well, I mean, let's pull on that thread a second. I mean I'm sure someone here is an appointment. I'd love to hear Simon's point of view. Only because I've heard, I kind of know what you're going to say, but a Financial hellscape is probably the scenario that makes bitcoin shine the brightest. And that's why it's kind of interesting that you look at it that way and that that doesn't really get talked about a lot.
- [08:30]
Dan
Yeah, well, so there's, there's a couple of things. You know, we, we do understand that a financial hellscape may not necessarily be capital disappears. It just means capital goes somewhere else. So you have to ask yourself, where does it go? You know, if there is a recolliboration in the model of the dollar milkshake theory where everything is sucked up globally into the US, into the dollar, into treasuries and into US capital markets and there is a shift in policy which is that these twin deficits are no longer something that we can handle or it takes us in a direction we don't want to go, then there is capital changes, capital outflows into other markets. And then if all those other markets and all those other currencies are somewhere where nobody feels safe, then your choice is to go out of digital and into physical with gold or you stay in digital and go to bitcoin. And so you've got these different scenarios. The market either returns to the status quo. The Trump administration does a fiscal stimulus. We got last week 1.6 trillion approved. It's talking about austerity. But Doge has only saved 105 billion while approving 1.6 trillion of spending. The same as the Biden administration. It's a bit of a narrative at the moment. We'll see whether that changes. But you have the status quo at which point the Trump administration's goal is to get a rate cut in order to refinance the debt, which means that we just enter into similar Fed led stimulus which has its impact on bitcoin, or we have a radical change in policy. China stimulating and it will do. China is deeply interdependent with the US economy, is trying to build its markets into other economies. But the consumption of America will have a very negative impact on China. And so that will be a global trend. So if we allow, if the controllers of finance, let's call them, allow for recessions, then you get this buy the dip opportunity while the entire financial system is actually thinking about what it's going to do now that America's got a bitcoin strategic reserve. And so the Trump administration has committed to becoming the world's capital of crypto and also having a bitcoin strategic reserve at the same time. The Middle East Abu Dhabi Sovereign wealth fund has invested $2 billion in finance. @ the same time, Russia, India and China have made public statements that they're trading with each other and doing international oil trades using Bitcoin, Ethereum and stablecoins. At the same time, European Union is going down the communistic route, stimulating a wartime economy while going to a central bank digital currency and launching its digital dollar. So every single region around the world is going to have to have a play. And that play is who can get their share of bitcoin in order to have the largest hedge against whatever comes next. And then you look at what is the play? Well, Bitcoin is now 800 exahashes of compute. It is solving 800 quadrillion maths problems per second. And those computers are geographically diversified across America, Russia, Iran, Europe, Africa, China and various other regions. And so you've got this play. And I'm sure the Middle east don't disclose, but it would be absolutely crazy if they weren't mining bitcoin too. And so you've got this global play with lots of different scenarios and whatever scenario comes through, if you get the complete collapse, then where is the money going to go? And I imagine that bitcoin is going to be one of those places that it does go. And I think it would benefit from a Fed stimulus and the dollar milkshake theory. And I think it would benefit from a recalibration of the global market and capital outflows from America to other markets. Now where else in the world could you have a long term strategy in order to benefit from all those different scenarios? I can't think of another asset class.
- [13:38]
Scott Melker
Well, yeah, I can't either. And I just find it amusing when we talk about everyone gets so hyped up around technicals. But there was a piece of news last week actually it's funny, it wasn't on the agenda. It could have easily been the agenda. We talked about it a bit, but this weekend there was a rebuttal from someone from the American Bankers association. The stablecoin bill, which was arguably one of the dumbest things I've read in a long time. In a sense, you know, almost every argument was wrong. And I, so I'm reading this and I'm thinking okay, how am I going to rebut this? And then Austin Campbell who every once in a while pokes his head up in here, he's not around now, but writes, you know, an incredible takedown of this and effectively the money shot on his, his point was that the banks are going to lose so much money when stablecoins improve the efficiency of payments, of course they're going to fight it. But understand what that means float, which is the ability for banks to profit. So when you send money to somebody, let's say there's three days between the two. For three days, the banks are in the interest and neither party has access to it. Well, that's going to go to less than three minutes. That's a very big difference in the tens of billions of dollars of money that banks make on interest, which disappears all around the system. And that's just the tip of the iceberg. So that's happening. There's very little doubt at this point after the committee vote that that's not going to get passed. And people always in the crypto sphere talk about use cases. That's a very big one, and I'm sure people care about that. But, you know, in terms of the crypto market, you look at the rest of the market and more people are worried about, you know, what does a 40x trader do and whether he's going to succeed. It's, it's. I, I find it, I find that quite fascinating. But, you know, so be it. You know, people can be irrational. Anybody else care of any of this stuff or should we move on to another topic?
- [15:40]
Dan
Yeah, I think the thing with stablecoins is no doubt there's going to be a fight. This is incredibly disruptive, like in, in a very large way. And so the Fed, the occ, the banks, the financial institutions, the lobby groups at all sides are going to want to be involved. But the reality is, is that Trump's family themselves want to launch a stablecoin. And the Trump administration, I would say, is way more, you know, who's paid for the Trump administration? Well, it's the tech companies significantly outweigh. So the Trump administration is about technology. And so the banks, the Fed, the occ, the market structure bills, the stablecoin bills, these are going to be big fights and they should be fought soon. But, you know, if stable coins are allowed to exist, which I think they will be, and the regulations, in a commitment to an environment of deregulation, which is the very specific commitment of percent, he's saying he wants to stimulate through deregulation and deregulate in particularly the banking sector and the credit markets as well. And so through that deregulation, the banks have two choices. You either allow all the tech companies to essentially take over the dollar in a partnership with government, where government can very efficiently borrow more and issue direct to stablecoin, or the Banking system adjusts and they become the stablecoin issues and they figure out what their model is. And I just don't see any other scenario playing out with the current administration and with all the goals.
- [17:34]
Andrew
Well, remember the, the Fed, the OCC and the FDIC and all of their leadership has effectively been locked out of all of the movement across crypto and adjustments in banking, the stablecoin bill, all of that stuff. They've been left out of any of the summits, they've been left out of any of the meetings. They've been, they've been left out of anything intentionally. So it'll be interesting, you know, what, what their version of, you know, fighting this stuff is, is going to look like. Obviously, there's going to be banking, you know, banking lobbies that are, that are, that are going to put up a big fight associated with it. But again, having, you know, those three arms of, you know, monetary, not necessarily policy, but monetary movement left out of, of, you know, the next level of innovation that's at least happening at, you know, at the governmental level is, is interesting and we'll see how it plays out. But there's no doubt that they have intentionally been removed from the current process. So we'll see what that looks like six months from now.
- [18:48]
Scott Melker
Listen, Andrew, we left them out of the process because we don't want them in here, we don't want them in with us. Bitcoin is beautiful. Everything's wonderful.
- [18:55]
Dan
We want to see crypto grow.
- [18:56]
Scott Melker
That's what we're looking for. That's what this is all about. I appreciate you guys having me on tonight.
- [19:00]
Dan
It's great.
- [19:01]
Scott Melker
Thank you very much.
- [19:02]
Panos
I think those were the words that the lobbyists had had in store for him. I don't know if you guys seen that summit there with Michael Saylor, and I think he paid a lot of money to have Trump say a couple of words, and maybe it didn't come out right. But in today's talks, you know, with regards to the price of bitcoin, I think, honestly, guys, you know, everybody knows the higher the rates, the worse it is for risk assets, especially the likes of bitcoin. But what's good and what's, what's, what's really pleasant to see, in my opinion, is that the rates are almost near the highest that they'll be. So the US Dollar is kind of sucking in its final push here on strength. And I think we start to see some rate cuts during the Trump administration. I know the Fed did kind of maintain the rate in January and obviously that's caused a drop in the prices. But it's very, very cyclical in my opinion, based on kind of the monetary, like the money supply correlation between Bitcoin and M2. There's quite a correlation there. We've seen how aggressive bitcoin has gotten in 2020 when the stimulus and the Fed was printing money. So now as we have kind of hit that higher, the next catapult is really just lower rates, in my opinion. So we're here discussing bitcoin being bearish at 80 grand. Guys, that's very good. Nobody's seen that happening, you know, six months or a year ago. So if bitcoin is bearish at 60, 70 and 80k, I can only hope what happens next when, you know, the rates start going down and more risk starts taking on the market? I think we really get pushed above 130 to 140. I put that target out about two months ago and I said that, you know, a great buying opportunity would be in the 75s. You know, maybe in the high 60s or low 70s. We've seen a wick down to 74. That might have been it, I'm not sure. But again, the plan hasn't really changed. And that guy who's shorting with a couple hundred million in leverage, I mean he's just playing market structure and market structure breaks to the upside around like 87k, 88k. Maybe he gets it. I don't think so. I think we go down a little bit more before we rebound back up around rate cut times.
- [21:28]
Scott Melker
Yeah, it always makes me happy to hear people say that AK because, you know, that's why, you know, I think we've seen the bottom in this cycle. I mean, I've said it multiple times because too many people, pretty much all the people who I respect who are generally bullish long term still think that we have, you know, we have downside here. And I think that, you know, when we were in the high 70s, you know, I said it. I still think so. Panos, you had your hand up. I, I don't know if your mic's available. Yeah, it was about the whole stable coin bill. Just, it's more of a question to the panel because I know we're talking about like there's gonna, there might be a fight between the banks and the people that are proposing the stablecoin bill and the tech companies. But isn't, isn't like stable coins and the stablecoin bill like the first step in the direction of central bank digital Currencies. And if that's the case, you don't believe so? No. In fact it's exactly the opposite. If you look at Europe versus the United States, the US model is to allow private stablecoin issuers to. As long as it's backed, it's really all about backing and it includes Treasury. So it's not just bank deposits, the banks want bank deposits. A central bank digital currency is one that's controlled by the government, programmable by the government and they can, you know, frankly, you know, if you saw some of the stuff out of Europe over the last, you know, last week, it's scary as hell. I mean, Simon, I know you left the uk, but I'm sure that when they start talking about, well, you know, you really shouldn't be able to hold that this much in your own wallet. You should have to be forced to spend it. I mean, you know, that's literally the stuff. These are the same people listening to the WEF who are saying people shouldn't be allowed to grow their own food because of climate change. So I don't know what's going on over on your side of the pond, but it's kind of nuts to me. Simon, you do have your hand up.
- [23:18]
Dan
Yeah. So I mean, I'll tell you what's going on. We had a hostile takeover of European countries by the European Union and the European Central bank. And the European Central bank is dictating policy. And these are unelected officials that are just asset stripping the European economy for the goal of the global financiers. And that's just the reality. The ECB doesn't care about Europeans. The ECB cares about who it serves, which is the global controllers of finance. And that's all connected to the war policies as well. And Europe is now going for a war stimulus and a central bank digital currency. And the key difference there is while they are two technologies that achieve the same means in terms of a technical play, the most important thing is how it's created and who benefits from its creation. So at the moment with stablecoins you have kind of the two largest and the ripple labs is looking to come up and get some of that market share is tether and Circle and they get a massive super subsidy from being able to give people a stablecoin and purchase Treasuries and then use that yield that the government is paying in order to acquire assets. And in the case of tether it acquires Bitcoin. And in the, in the case of circle it's a bit More of a conservative strategy. And so what you have in its in essence is that will become a very competitive process from stablecoin issuers. I'm sure Amazon will launch their own, I'm sure Facebook will launch their own. PayPal already has their own Trump World Liberty Financial will launch its own and it's kind of a return to the pre Federal Reserve free banking system. Then you have to look at how is it actually going to be structured. Can you actually issue debt direct from treasury to blockchain asset? Then in a sense you've actually created an environment where the Fed is questioned. Whereas the other way in Europe you take the same technology but you create a monopoly on the issuer and that issuer is rather than the private banks creating digital euros every time they issue a loan you give a monopoly to the European Central bank and then the European Central bank can benefit from the creation of the digital dollar. And so these are very, very different models, same technology. But at the same time you would imagine that in a free stablecoin free bank so be competition amongst change with chains. Which is why you know, the, the XRP lobbies and the Cardano lobbies and the Solano lobbies wanted to make sure that they were sat around the table with the Trump administration. And there's a reason why Justin sun and Tron wanted to invest in World Liberty Financial because they're all vying for who are going to be the stablecoin issuers and which chains are they going to be used. Whereas in Europe it will be, we're telling you what chain we're going to use and it's probably going to be our own chain with node operators of each of the European central Banks of each of the different members and who benefits from its creation. So these are architecture and they have significant impacts in terms of who gets the power. And the Federal Reserve was a victory over the central banks creating a private company where its shareholders were the benefit, which is the private banks of the profits from creating the dollar. So it's that battle again. So same results? Well actually not same result, just very, very different. But two different models, but same technology.
- [27:41]
Scott Melker
Yeah, I think it's worth noting how important this is. People don't think about the second and third order effects. I mean right now someone mentioned talking about the OCC and they weren't invited to the table. That's because Trump's nominee hasn't been confirmed by the Senate yet. I mean we are still waiting. People are saying, oh, people are looking at everything the Trump administration is doing and they're saying oh my God, they've done so much, it must be in full swing. Remember the head of the sec, occ, CFTC are not in the seats yet. So when they are in the seats then things can move. And understand a true free open stablecoin market effectively takes out and makes our financial markets 24 7. Whereas since the failure of, well, failure is the wrong word. Since the assassination of Silvergate and signature, large swaths of the market have been, have become at a very bare minimum, lots of sand in the gears on the weekend. Even in crypto and in traditional finance they're definitely, they're definitely down. Stablecoins will allow for many things and there's going to need to be regulatory accommodation for that speed up and for that disintermediation. So it's a very big deal. And the fact that it was a 2/3 vote meaning quite a few, all the, as all the younger Democrats voted to get the bill out of committee, it's a, it, it means a lot. And so we'll stay tuned. But I do think that that news is, is going to matter because think about it right now in, in, let's say you want to buy any stock in the United States, well, you have to have dollars in an account that's at your broker. Well, what happens when you can buy stocks and stable coins or move money around that way it changes the accessibility to US capital markets. And so there's all sorts of implications there. But we'll go whatever. Yeah. Yes, Simon.
- [29:37]
Dan
Yeah. There's another aspect to it as well which is the chain that is used, whether it's some kind of distributed ledger technology or whether it's a country that decides, well we're actually going to do it on Bitcoin, on lightning, just like Tether is doing right now. So if you end up with stable coins that exist on bitcoin, on lightning and then you also are building a bitcoin strategic reserve, then that is the ultimate play of what could be the plumbing given dollar dominance at the moment if it ended up with a bitcoin strategic reserve with stable coins on bitcoin and lightning. And that was the backbone that you would be transitioning the world to a bitcoin standard because the game theory would just work out that way. At the same time there's another play which is you can control the system by controlling the stakes of proof of stake networks. And so if you are blackrock and you would like to have significant influence, then you launch a Bitcoin ETF and you get in a deregulation environment, then to approve the ability for you to stake it. And once you stake it, you then get a significant control over the governance of the proof of stake network. And so having those within your sovereign wealth fund as strategic investments as well, or, you know, whatever, however you want to do it, there is a whole staking play as well. And obviously because those are significantly more centralized and connected to companies, there's always the pressure of the lobby to push it in that direction. But I do think the ultimate play will be the country that has Bitcoin strategic reserves with stable coins on top of Bitcoin and lightning. That would be a future backbone of the entire financial system. And I think it would win.
- [31:49]
Scott Melker
Well, it certainly could. I mean, the other thing that that's been, that's been going on, people are talking about, you know, lots of freaking out about ETFs. I mean, the, you know, the story that Mike McGlone was crowing about this morning was that gold ETFs once again repassed Bitcoin ETFs, which I think is funny for a number of reasons. But, you know, it's the notion in the United states that the ETFs are the only thing that's driving Bitcoin adoption I find amusing, mostly because it's silly. It is certainly a factor because it's being accumulated by investors through ETFs. But I'm curious, does anyone in the panel see this or are we just in this dead period where we have a few passive institutional buyers that are lapping up bitcoin supply and crypto people freaking out and selling because they think technically it's going to go lower. Anybody want to take that? David, you just jumped up. I know you, you, you, you look at this stuff and, and I'm going to ask you about Ethereum as well, because Ethereum doesn't seem to be able to get any momentum above 1900 and it's well below 2000.
- [32:54]
David
Yeah, so look, on the, on the broader point, I, I don't know all of the market forces at work.
- [33:01]
Scott Melker
Right.
- [33:02]
David
I'm generally in the rooms with people or I generally talk to people who are fundamental, you know, investors. But there's certainly a whole boatload of folks both crypto specific and then, you know, frankly, asset agnostic in terms of people that are trading on the basis of momentum and whatever other technicals, you know, they go ahead and trade on. So I don't know, you know, where the flows are coming from. I don't think they're Largely fundamental flows and I don't think they're largely long term holder flows at least, you know, based on the conversations that I've had, the sentiment that I've heard and so on. In terms of eth, I mean I think we, we all generally know at this point, you know, that ethism, you know, Neverland and you know, they, they, they really need to pull off a turnaround at this point in a couple of different manners in terms of frankly use and revenue. There needs to be a resuscitation of that storyline. The revenue is really important in terms of, you know, what layer twos have done and base and then to see whether they can get their act in order. In terms of the Ethereum foundation and whatever other efforts inside or outside to go ahead and kind of resell and retell the Ethereum story. I wouldn't count them out in terms of technical pressure, yes, they've been certainly punished worse, you know, but you know, to say that it's been an incredible standout in terms of, you know, how much, how much further it's gone, you know, to Solana. I just think there's a lot of Solana boys out there or fans out.
- [34:51]
Scott Melker
There that rah, rah rah it up.
- [34:52]
David
And are holding it up and, and frankly good for them. You know, there's a sense of community there. But you know, I, I don't think, you know, we're at a point of weakness. It's very hard to judge, you know, whether things are down and out or whether, you know, there is a comeback in the offing.
- [35:07]
Scott Melker
Paul, Paul, is your hand, is your hand up? Looks like it. Is anyone else here? Paul? Because I can't.
- [35:22]
Panos
No, we can't, we can't hear.
- [35:23]
Scott Melker
Paul.
- [35:25]
Panos
Okay, I'll touch base on, on the technicals. I mean, you know, certainly on David's point here, from a fundamental aspect, you know, you always want to, what they call when in doubt, zoom out. And I do that really more so as opposed to looking on the contrarian side or on the fundamental side maybe from a technical long term kind of accumulation. When we look at the monthly chart on Ethereum now it does depict like it's not quite there, but it does depict what may look like a monthly multi year kind of cup and handle. And we are right now in the handle. And I think that what we see next is going to be much higher prices as we see the dollar get weaker after its last hurrah here and interest rates begin to drop. I still maintain this, I think from a technological standpoint I think that the fear of Ethereum being toppled as the second kind of worldly crypto, whereas a lot of people that entered the space many years ago, like myself, looked at Bitcoin like it's gold, looked at Ethereum like it's silver. And you need silver for a whole lot of things in this world. But the prices could potentially be manipulated.
- [36:49]
Wick
Or.
- [36:51]
Panos
Suppressed for a certain period of time while that ecosystem takes shape and a lot of the nations maybe load up on it. Now, does it have deflationary status? I don't know. Whereas with Bitcoin there's a limited supply. But Ethereum really to me is where the world really kind of gets together and has a lot of applications be built. And it would be a really big shame for us to see the Ethereum dominance be given away. So in my opinion, it has underperformed. I do see a lot of people giving up on it, but I don't think it goes anywhere and I think it will shoot up past the 4 or 5,000 mark there, where a lot of people have been historically kind of calling for, I think this month here is the month where this like wick is going to probably be caught somewhere halfway and we're going to start seeing better prices. That's just my prediction.
- [37:53]
Scott Melker
Paul, is your mic working yet?
- [37:55]
Paul
Mic check. Can you guys hear me okay?
- [37:56]
Scott Melker
Yeah, we hear you. Great.
- [37:58]
Paul
Okay, cool. So I want to say that basically I think the current failure of Ethereum has probably a lot to do with the failure of the L2 experience on Ethereum. Really looking at when the Ethereum foundation decided to kind of go down the fork in the road of not scaling its L1 is where we really saw a drop in significant interest in the core Ethereum asset. A lot of the fees that would normally be collected by the miners really went to these various L2s. And it's a sad state of affairs because if you think about it, a lot of these L2s were able to gain funding and have big payouts from basically issuing a token as opposed to actually building out the native L1 Ethereum ecosystem. And this is where the other chains, solanas and the SUIs of the world really having the narrative and story of a fast L1. And once again, there's obviously a lot of debate about whether or not that scalability comes at cost. I'm sure Simon will have an opinion, being more of a Bitcoin purist, that they compromise some level of decentralization, but from the user experience point of view, it's pretty Clear that Ethereum fell short of these other chains that are clearly nipping at its heels. And fundamentally I would start getting interested in Ethereum again if the foundation, which is starting to show some signs of needing change, if the foundation started to reprioritize the scaling of its L1, even if that's compromising all the different L2s. And right now it's leaving an opening. And actually I think the biggest opening because of Ethereum's failure is actually for Bitcoin. This is where Bitcoin and Hopefully a better L2 experience can actually take over a lot of the Defi smart contract ecosystem, a lot of our financial ecosystem with putting trading, hedging and even stocks on chain. This is where I think Bitcoin's opening is kind of. Bitcoin kind of needs to take this opening before Ethereum and other chains really capture that kind of mind share outside of just the store of value narrative. And so I'd say that's what I'd be looking out for before kind of re entering and being interested in Ethereum again. Is this a fundamental shift in its priority for usability and scaling?
- [40:09]
Scott Melker
So since, since it's always good to have controversy, we know that there are a lot of listeners out there. The one other point that's been made over the weekend, quite a few of the XRP army pointed out that on a fully, fully diluted market cap basis that XRP actually flipped Ethereum at these levels. And you know, I'm going to leave it right there and see if anybody wants to comment on the relative merits of Ethereum versus XRP for powering the next generation financial system. Anybody want to take that one? David, you're welcome to hear what you have the hand up. Go for it.
- [40:44]
David
Yeah, so that's not actually the most concerning. I think something that's a bit more fundamental is now that the ERC20 is greater in Turkey in terms of tokens on Ethereum than actually Ethereum. And so to me that that internal flip is potentially more concerning than the XRP flip. But maybe Amatea has, has more to say.
- [41:16]
Simon
Yeah, can you hear me Dave?
- [41:18]
Scott Melker
No problems.
- [41:19]
Simon
Okay, Yeah, I mean I have less of an opinion on that David, and more of an opinion on the fact that Defi itself has been in an absolute war with the government for several years now, which has been literally tech suppression. Obviously people have still pushed in the direction of using Defi, but I think now we're looking at the opportunity for institutional adoption of Defi. And I think if you look at Solana Sui and these other options. I think when you examine Ethereum costs, there's still cost effectiveness. I think the cost effectiveness of using Ethereum will continue to improve. I think there's just all of this smoke that it's working to get through. I don't think Ethereum's going anywhere. And I think that the extremely bearish sentiment on Ethereum is proving close to it, making a bottom against Bitcoin. And I think that at this point it's become the most hated rally and I think we'll see it rally and I think people will hate it and most people will say that it was obvious in hindsight. I don't know how it has anything to do with stacking up to XRP because I don't know what XRP really does.
- [42:43]
Panos
Still to this day.
- [42:48]
Scott Melker
I'm laughing. There are people who would say that the most important question about Ethereum is is it a value trap? That's really the issue is does a, you know, what David mentioned is actually healthy. There is no version of the world at scale where the native token should even be close to the value of all the people who use it.
- [43:12]
Panos
Right.
- [43:13]
Scott Melker
You know, it should definitely be lower, but the fact that there is value of people who are using it is actually a support for the value of the native token. Right? Okay.
- [43:31]
Panos
Yeah. I mean, for me, one of the main reasons I really kind of took interest in kind of a lot of the L2s or I guess a lot of the builds that come out of Ethereum is really for applications that support our real world and we're able to really onboard or provide some value to people on chain, for example, like DeFi. I got really, really involved with crypto once the DEFI kind of landscape started to appear. A lot of yield started to come on chain and a lot of ways for us to really build rails there in terms of creating long term value as well as a ton of the developing activity because almost everybody was just building on Ethereum strictly. But of course with, with competition comes lots of, you know, fluctuations in market conditions and prices. We're seeing that with all kinds of other chains where you know, there's different types of ways for you to transact, for you to lock up liquidity and earn yield and support the, the, the layer, et cetera. So for me, you know, it's just, it's what you're looking to get out of it. And I think there's a ton of upside for Ethereum just because it has the mind share as well as some of the credibility With a lot of the world, as opposed to some of these newer ones that do maybe have better capabilities, but they're just not quite there yet. And mindshare for everybody in the world of crypto, as many of us may want to think that it's large, it's really not that large. It's really a lot of the same circulating players and big funds that are moving the markets. But as we continue to, I think, in my opinion, push for more adoption, you know, Ethereum is not going anywhere. I don't see that happening.
- [45:36]
Scott Melker
So another, another topic, you know, we talk about the technical trading. I mean, I was just looking back, you know, so last week we were chatting on Monday, people were, you know, more, slightly more fearful. But one of the topics that have come up as we approach Friday and I noticed Wick was up here, so I'm going to put you on the spot, is that there's a fairly large options expiration and what is Max Payne for? And, and what does that mean? So are we effectively going to be pinned in this range where we're currently at because of the options expiration and we'll see what happens after, or is it not big enough to matter at this point? Is your mic working? Anybody else want to talk about. There we go. Okay. Can anybody hear him? No. Okay, well, that's it. Hopefully we'll get. This is, this is the, as Scott calls it, the, the world of glitch in spaces.
- [46:38]
Dan
But you know, why don't you talk about it, Dave?
- [46:40]
Scott Melker
Yeah, so I mean, look, there's been a lot of conversation about the fact that 85,000 is sort of the max pain level, meaning that, you know, from the market makers do the best. If the price ends up at 85 round. Numbers tend to be that way. It's because people buying, paying for premium. And so the question is, is, are we likely to kind of stay in this kind of range and move towards that as Friday happens or will we stay down, you know, go back or revisit to where we were last week, which was sub 80,000, around the 80,000 level. And I think we'll see because the one thing that when you listen to AK and other people talk and it's, I'm not picking on you. I think most people in crypto do this, myself included. We all realize we're in a small playground and most of the traders are based on 10 or even 8 or sometimes 4 years of trading history and looking at the technicals, right? And so the net of it is surprises happen. It's probably worth noting that we know that if you take the 10 biggest performing days out of bitcoin every year, it's basically flat going back a decade.
- [47:55]
Panos
It's the same for the S and P too. It's the same for the S and P as well, most assets.
- [48:00]
Scott Melker
Is that true? I guess I remember the S and P grinding a little bit more than bitcoin grinding.
- [48:06]
Panos
Well, the S and P always grinds but in a previous life where I did some advising for a lot of clients, you, you know, a lot of the times you would say it's all about the time in the market. As long as you are in the market, you're okay. The time that you're not in the market and you're trying to do some form of timing, you're going to miss out over like a 50 year period, I believe or might have been even been 100 year period. But I do know that the 50 year period, if you missed, I believe it was like 21 days or 26 days of, of the best days of those market moves. You pretty much missed out on all the gains. It's, it's insane and it, it starts to show the correlation because if you are an entrant at a certain point after that or you're an entrant at a certain point before that but exited after that, you missed out on the gains. Right. So it's almost, it's almost the most certain strategy for anybody who wants to create wealth and long term to just continuously buy and buy and buy and dollar cost average in. If you believe in the asset, when you need to sell it, you can sell it at times of peaks and when it's slow you, or when you consider that it's at times of low or based on your average it's low, you buy more. But I've seen that like I said, most of the people who've tried to time markets have failed in the longer term. Now if you're a short term trader and your, you know, your objective is to trade in and out or swing trade and that's your strategy, great, you could probably beat the market, but you may have to work a lot harder as opposed to somebody who just buys and holds for 20 years and really takes advantage of these big days that come in the market. I'll pull up the stat, but it's something like 20 something days that defined like 50 years of growth, which is crazy. So same thing with bitcoin.
- [49:57]
Scott Melker
Yeah, well in the bitcoin case it's a bit higher. So Wick is Your speaker working, your mic working unit. No, I can't hear. I'm assuming nobody else can.
- [50:11]
Paul
No, can't hear.
- [50:12]
Scott Melker
Okay, well, so be it. We'll keep trying. Probably something to do with the mic on the phone, but, you know, it's. When you look at all these technicals, I mean, I often laugh about, you know, the correlations that people talk about, but the one thing about Ether and Solana and XRP is the eyes on the prize is what matters. You know, the size of the marketplace that they could disintermediate is enormous, but none of them really have. So looking at what's already happened isn't nearly as important as looking at what could happen, you know.
- [50:50]
Panos
Hey, Dave, I just looked it up and it says typically fewer than 20 days in a decade drive the bulk of returns in the S P. Okay.
- [51:01]
Scott Melker
Yeah, so.
- [51:02]
Panos
So, I mean, that's the stop.
- [51:04]
Scott Melker
Yep. Well, okay, so I guess it's all financial assets. You know, it's, it's. There's not a whole lot that you can do about. But why is this? And the why is if you look at most of the S and P returns and you factor out money supply growth and new money printed, it's. It's not nearly as large as. As you think it is. It has been over certain periods and less over others. But the reality is the denominator is what's actually moving here. The difference with Bitcoin is people believe that its adoption will make it grow in real terms. And that hasn't happened yet, to be blunt. I mean, it's happened a little, but not nearly as much as you might think. Most of it has been on the back of the fiat currencies, which we measure it just being debased. Right.
- [51:58]
Wick
Makes sense. Hey, Dave, can you hear me at all? I left and came back.
- [52:01]
Scott Melker
Yes, we can hear you. Okay, cool.
- [52:03]
Wick
Okay. Okay, good. Okay, interesting. So I, I'll bring up some interesting facts. So when we look at the market cycle that we're in now, we've had two other periods where it's been kind of similar. We can take the last period and then we can take 17. Obviously, a lot of economists are looking at 17 as the last cycle. That kind of rhymes, right? Trump's in office policies, that type of thing. And I like that frame of thought as well. The problem is that when I look at 17 and I look at the price action and the strength of the price action, the sad news is that we never had dips that were this bad. If I'm looking at the Overall relative strength right now, I'm looking at it, 17 was a lot stronger than we have this year. And then if we go to the, let's see, 20, 20, 21, right when we're coming out of COVID I don't know if you remember that cycle, but we had that first head, we dropped down, everyone thought it was a bear market peaked again just a little bit higher than the all time highs. And that was the end of the bull market. That's when we went into the bear. Now in that phase that, that is the exact part that we're in right now. We went from a peak high to trough on a 55 correction within that year. The same, the same, the same time period that we're in now. And then after that correction, even after we were just coming out of COVID which I think is far worse circumstances than now after that 55 correction, we went on to make a 140% gain off of that low. So when I look at that and put it in terms, I still am very much a believer that my framework, the end of May is when I think we'll start not going up again. I think we'll go up before then, but I think that's when we'll start really getting into that parabolic leg again. And yes, options expiration is a big deal, of course, rates are a big deal. And then just the overall business cycle in itself. I'm sure you've heard people like Raoul talk about the business cycle. I take all that into account and I still very much 100% believe that mid to end of May and this rhymes with a lot of other people. That's when I think we're going to probably start seeing that next parabolic leg. And I don't think that anything we've seen so far is abnormal. Is it as strong as 17? No, but it's a lot stronger than 21. And even though 21 again had Covid, we still came back for that 140% leg before the end of the bull market. So I'm still very much bullish.
- [54:37]
Scott Melker
Yeah, it's fascinating when you look at 21 because I always make the comparison that the euphoria in 21 was on both, both peaks. Right. So when, when it crashed off the first peak and came down as 55, the leverage in the market was so much higher than the leverage in the market when we were over 100. You know, a couple months ago, the, the bitcoin network or the ratio of the price to the actual hash rate was so much higher. It was 5x actually, which is a very big difference. So the, the euphoria was dramatically higher. Yes, people were sitting at home with nothing to do. Yes, there were some stimmy checks going in. But the types of buyers now are different. It's not just that. Right. And so, you know, I look at it similarly to the way you do. I just think it's more sustainable this time. I mean, I think the 21 got way ahead of itself. You know, 17 is a bit different because that was, it's all new and shiny and nobody knew that the administrations for the next and the back half of the Trump administration was not friendly to bitcoin. In fact, Jay Clayton, for two years, the last two years, the Trump administration blocked broker dealers from offering bitcoin trading services. They blocked an even discussion at his level of the bitcoin etf. I know because I was down at the SEC twice talking about it back in those days. So you had six years of regulatory hostility. And so think about that versus where we are today and the potential for euphoria if we get there and we're nowhere near there. We're the exact opposite of euphoria now is much higher. And that's why I say what I do. 444 and all that stuff, whatever. I just think that markets do tend to go in cycles and the next euphoria will be dramatically higher than people expect it to be is the only thing that I would say.
- [56:33]
Wick
Yeah, yeah, look, you're absolutely right. I agree with you. I think the fundamental framework or the backdrop for bitcoin is a lot more bullish than it was before. And even other things, when you look at liquidity markers, right, like the ISM Purchasing Manufacturers Index that is right now above 50 and 50 is usually the, the line in the sand between being bearish and bullish. And M2 has also been rising. So there are signs of liquidity coming back. Not into the market, but soon that'll be coming back into the market. Usually there's about a two to three month lag and that's why everything I'm seeing right now is lining up for that May, that May leg that I'm thinking, because liquidity is good, you got the dollar coming down, it's in a downtrend right now. It's about to hit resistance there at I think $102. And if we break that $102 by May and fall below that, there's literally nothing stopping bitcoin from flying. Except for maybe geopolitics. Right? Maybe we have seen like Powell has not been too accommodating to this new administration. I think that's one of the things that have held us back. We priced in so many rate cuts while the last administration was thought to win. And this new administration comes in and everything changes. He says that his target is 2% inflation and he's not going to stop cutting until 2%. All of a sudden he changes. I think that's what really threw a wrench into things is that we were expecting those rate cuts, cuts. We priced them in, into the S P and everything and we simply just didn't get them. So a pullback is warranted. And again also if you go back to the last cycles, if you look on your chart on Bitcoin, every time we go and we're in that in the same cycle we are now and we approach March, we always have a huge pullback. Every single cycle around March, April, we've always had that big pullback. So yeah, again Dave, I'm, I'm in your camp, man. I don't think anything's abnormal. What I've done myself is, is I, I kind of assumed that Q1 would be pretty weak. So I held all my long positions personally. I bought some put options. I haven't cashed them in. I'm just going to keep them as a, as a hedge. Yeah. And I think that that leg in May is, there's nothing to me that says to me that we won't get it. Everything is lining up.
- [58:55]
Scott Melker
Yeah. Before I go to ak, I want to make, I want to make a three letter word which explains a lot of why March does what it does and that's called taxes. And the reason why smart people don't sell their long positions and buy put options are because you don't want to pay 30 plus percent on very large gains. Let's say unless you held, unless you have, you know, long term stuff that you can sell Even then it's 24%. So you got, you really have to be right if you are willing to leave the market to sell. Unless you're a trading firm. And so that drives behavior in March to complete. The thought is generally when people want to make sure they have the cash to pay the tax bill that's coming the following month. They don't. Very few people wait until April 14th to, you know when they're going to write a check on April 15th. And so you, we've seen these sorts of moves before on, in, in the tech sector in particular. And so it's not all that surprising to me. Okay, okay.
- [59:51]
Wick
100.
- [59:52]
Panos
Yeah. Wick, I, I just want to command you and tell you that, that this is quite, almost similar to the same reading I'm seeing with the dollar just getting a little weaker the rates and essentially us getting this next little kind of spring action on bitcoin and seeing the prices really improve. So I was kind of calling it like, maybe like a very large multi month or I guess multi year cup and handle but on a monthly base, on a monthly chart. But you know, with your Comments on the 2017 kind of, you know, very, not very much regulated kind of like very much so the Wild west. Then again in 2021, tons of liquidity tests were put in by the likes of Elon and Tesla accepting bitcoin and things that really kind of showed us where the big movements would happen. I think all of that's behind us now. And again I, I just mentioned, you know, we're discussing bitcoin being bearish at 80k. Like that is a sentiment and a feat on its own. Right. So I do think that in May, kind of alongside with some of my earlier predictions that we are going to see the low 70s or mid 70s, we also see 140, maybe 150 come the mid, mid, mid, mid to late part of this year. So I think everybody's on the same point here. Lots of bullish sentiment. It's just about rotation and making sure that you're in the right asset class. We saw that a lot of altcoins have taken massive hits this year just in the last two months since the inauguration. So it was definitely a sell the news event. I see some of my favorite looking ones down like 50, 60%. But I, I don't think that that's, that's anything out of the ordinary. This is typical crypto for points. But what really, really matters in my opinion is bitcoin maintaining its dominance and relevancy. And I don't think that's going to go anywhere. Definitely not in, in this first year of Trump's presidency.
- [61:56]
Scott Melker
Well, yeah, sorry, go ahead.
- [61:59]
Wick
Sorry, Dave. Okay, just one thing I wanted to say before I jump off here and I'm glad that you, that you brought that up, ak I actually didn't want to mention that. But if, if you actually look on the chart right there, the last cycle around April of 24, that high that we made there, that that would be called a logical place. That would be called a logical place for price action to pull back. And that's exactly what you mentioned. That's between that 70 and 73, 000 area. So yeah, if it pulled back to that area, I wouldn't even consider it bearish. That would actually again be a logical place for price action to pull back to find that support and then base off of there and then bounce off of there. So I just wanted to make point that out is that I agree with you on that 70-73K area. That's a very high probability area right there as well.
- [62:47]
Scott Melker
So I was going to say we're basically running out of time. I think if the market stayed boring between now and tomorrow morning, maybe we can dive into some of the altcoin markets and some of the shifts that we're seeing in there. I mean my portfolio is fine, but there are pieces of it that just looks look like absolute crap. And you know, the real question is is, you know what's going on there. And I think that'll, that'll be an interesting topic for tomorrow. But unless anybody has something else to say for today, I think we'll wrap it. Any hands out there? Okay, so once again we'll see you tomorrow at 10:15 on crypto town Hall. Have a great day and stay safe everybody.