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The Wolf Of All Streets
BIG WINS for Bitcoin: Strategic Reserve & Crypto Summit: SO WHY IS IT CRASHING? | Macro Monday
01:05:07
BIG WINS for Bitcoin: Strategic Reserve & Crypto Summit: SO WHY IS IT CRASHING? | Macro Monday
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- [00:00]
Scott Melker
The crypto industry scored some massive wins last week, including of course the strategic bitcoin reserve and digital asset stockpile. And a meeting of the greatest minds in crypto at the White House. So why are prices once again dropping? The answer is probably macro and because of a miss on expectations, because the crypto industry believes that the entire universe revolves around us and anytime we're slightly disappointed, we cry like babies and sell our bitcoin. But otherwise it probably is largely what's happening with tariffs, uncertainty in markets which we know that they hate. Good news is it's macro Monday and we haven't had a chance to discuss any of this yet. So we've got Mike, Dave and James to unpack all of it. Can't wait to have this conversation. Let's go.
- [00:53]
Mike
Let's do, let's do.
- [01:08]
Scott Melker
What is up everybody? I'm Scott Melker, also known as the Wolf of all streets. Before we get started, please subscribe to the channel and hit that like button. Gonna go ahead. Bring on Dave and Mike. James having a slight camera issue right now before we dig into everything happening with bitcoin which is currently trading at a, a low, low price, I would say of $83,100. Obviously altcoins suffering. We're down about 10% plus across the board on crypto. This is not native to crypto right now, right, Mike? I mean we've got just headlines across the board. Stocks hit as economic fear spur flight to bonds. Whoop bonds. Mike, you gotta be loving that. Trump says US economy faces transition avoids recession call to just plow through these Treasuries gain as Trump transition talk fuels recession angst. Crypto equities slide in pre market after bitcoin falls to 80. Do you guys get the idea yet? And of course Bitcoin's targeting 70k apparently because of Japanese bond yield struggles. We don't have any other problems. It's going to be the Japan carry trade or bond yield struggles we have to talk about for bitcoin. But maybe you can unpack the morning meeting and what the hell is happening in the macro right now.
- [02:19]
Dave
Well, I want to start with the good news in crypto and that is Dogecoin is only 26 billion. That's down 50% from where it was just at the end of last year. And it only has an another 26 billion to go before I think we see a bottom in cryptos, unfortunately, maybe 25 billion but so come on, let's talk about fun stuff here. It's just that's the silliness of this space there's still it struck me, you know when we all tilted towards the savior Mr. Trump getting elected. Yeah that was a major pivot. Give him credit for that. But then the Milani coin and Trump coins those are signals of pretty significant peaks and assets that I look at is very similar to 1929 stock market. But back to their morning meeting Anna Wong came on the number did not come out as weak she expected but she says all the data is tilting that way which is what the market's really looking at. You know it has to look forward to that hangover of weakening government jobs and even state and related entities Doge layoffs, a big punt push on payrolls numbers she says the key thing is she's pointed out is the scale of the trade war now is about three to four times what it was during the first trade war. China's exports have soared. That's all transitory. I published on that this morning. She's looking at PMIs and manufacturing should show a drag in economic activity. And her quote she's looking for food prices. She's wondering if food prices are going to go higher or lower in my space typically they're still heading lower in terms of the macro ones that trade in most indices like corn, soybeans and wheat. Gina Martin Adams remains quite bearish give her credit she was the bull for years and she says I'm going to sign for global stocks. US was a worth worst performing stock market last week which is very similar to 2022 key things that she pointed out tariffs and cost of goods sold US multi nationals will probably have to eat the bulk of those. These are things we talked about for a while Cyclical indicators are turned down for earnings at the end of the year biggest headwind is expectations remain far too high so she's still quite bearish. Iyer Jersey I thought made a good point he's our chief interest rate strategist that markets are more reliant on risk assets and that's key thing is once we if we do what we're doing this morning if we stay below that 200 day moving average in S P500 everything go tilt that way Bitcoin's right at it theory is right at that key support we all know that traders are supposed to buy it's easy, it's free not you know you've been able to do that no problem but once we tilt lower it's the problem and I didn't say if it went Audrey Chill Friedman are interest our FX strategist says weaker dollars gaining momentum. And that's a key thing I want to bring out that Gina taught me years ago. They're. So all correlations go on to one. The dollars completely runs on the back of the US stock market, at least since 2011. Stock market's going down, dollar's going down, stock market goes up, dollar goes up. I mean, it's all related.
- [05:03]
Scott Melker
It's the opposite. Don't they. Isn't a weaker dollar supposed to be bullish for risk assets? Isn't that what Twitter tells us?
- [05:10]
Dave
Well, what drives. What drives. Okay, that's kind of a secondary, maybe second derivative. But what drives the dollar either way is U.S. stock market, U.S. assets. And that's been the case for years and forever. So. But that's kind of from the whole space for me, from the macro. Good news is crude oils had good support. Everybody's bearish, which is. Makes me feel lonely. I love being lonely when I have views and I'm still bearish. But it's stuck at 67. Pretty good support now. Just sign with this. I think bitcoin peak is enduring at 100 grand. It's part of that reason that gold's kicking in. ETF inflows are kicking straight up. Yes. While gold's ticking downward. And there's potential for some major reversion in these markets just getting started. But as a day trade right now at 200 day moving averages, traders are probably. Well, they're not this morning. These are levels where typically we've attracted support.
- [06:03]
Mike
Yeah.
- [06:04]
Scott Melker
The dollar down, bonds up, gold up, bitcoin.
- [06:15]
Mike
The funny part is, you know, I listen to Mike talk through all this and I think Gina Martin, great. And I think there's all sorts of really good nuggets in there. The interesting point the, the sentence in there that matters is all of the things that he talked about. Every single one of them impacts earnings. So if you look at earn and what are earnings? Earnings are. Are the cash flows that companies that you invest in can. Can attract in that situation. The more that that is true, and I believe that that is true, the more liquidity you're going to see pushed into this market, lest something break. And so the divergence is coming. Yeah, I feel like now I'm lonely. So if you remember Game of Thrones, when the first people started saying winter is coming in season one, I feel like I'm in season one saying divergence is coming. All of the, the, the, these signs, all the things that are lining up matter. That's why I wrote this above Me, right now, markets are being driven by liquidity. Bitcoin doesn't have the beta that Mike used to talk about. Notice he doesn't talk about 3 times beta anymore, because it doesn't actually. Nvidia's beta has been higher than Bitcoin and Nvidia's volatility has been higher than Bitcoin is the one that drove the stock market up, and it's the one that's leading it down right now. So you can't go there. But now, why? Why? Because Nvidia is a hype asset that may or may not grow into the AI revolution, which is real, will be enduring, is going to be a sea change. But the question of how much money can you actually make from it, and where will there be competition? And what will happen is what's driving people crazy? Because, like, what happened in 2000, you know, in 2001 with the Internet bubble, which is incredible, I'm actually seeing stories in the Wall Street Journal about this right now, you know, comparing what's going on now to the Internet bubble. There are lots of things that, that could teach us. And one of the things it teaches us is, as Mike says, a lot of the crap is going to go to zero. That's true. The question is, what's the crap? And that's what needs to be determined. The other lesson that we learned from the Internet bubble is things that have real value that are going to persist and do well are going to build generational wealth. If you buy and part people learn that from markets. So I made a point this afternoon, which is in the world of equities, in the Internet bubble, Amazon made generational wealth, if you dca, during the entire.
- [08:44]
Scott Melker
Time, but most did because they thought it was a book company.
- [08:50]
Mike
That's right. That's right. Well, no, some people did. And I remember arguing with those people, and those people were right and I was wrong. And okay, great. But as humans, we like to learn from our mistakes. The. The other people who made absolute shit, tons, back up the truck sorts of money to the point where they, the, the industry itself grew. You know, the whole industry were. Because they all realized what was going on and they just put their heads down and they invested. They put all their chips on who they thought would win. And guess what? Whether it was Google or PayPal or, you know, you know, the list, they all did phenomenally, phenomenally well. Now, what's the difference in crypto and equities? Well, in crypto, yeah, they're a. But pretty much everything is immediately Liquid and available to the public. None of the stuff that really did well outside of Amazon and a few others did really well. But the ones that did do really well were all available to VCS and they were churning and they were building and they were and whatever. So you know, I don't know if Solana is the, the Google of platforms. I don't know if SUI is or Aptos is or Ethereum still is. But to be said a couple of other points and I know there's a long winded rant. First, I really think it's important to consider Bitcoin very differently than Ethereum and all the other crap that I was just talking about. Bitcoin has more of a tailwind today than it has at any point in my lifetime. And when you think, and the second line that I have above me, liquidity in the short term, adoption in the long term. Remember the Bitcoin is not an asset where 100,000 is even a meaningful number. The first meaningful number for bitcoin, real meaningful number is roughly somewhere around a million or 1.1 million right now, which is parity with gold. So the quest right now, it effectively is trading like there's no increase in adoption metrics, no more likelihood of that. And when the President of the United States has an executive order with that effectively says Bitcoin is a strategic asset, it does matter for long term adoption. You need to understand the people that will be driving the long term adoption really. And this pisses the hell out of the crypto community, but it's people that are green eye shade types, the pension consultants, the internal fund managers at state pension plans, the, the RIAs who look older than me, who have more gray hair or less hair. And bull are all sitting here saying, wait a minute, we got the White House and we see the price dropping. It's like, what does that mean? Well, okay, you know, they'll wait and when the price starts, you know, is stable or is rising, then they say they need to get in. And I want, I want James to unpack what he's seeing because you run a fund with Bitcoin, you, you know this, and this is a big deal. That's the point. When I talk about adoption, the last point about Ethereum is Ethereum is priced at its market cap. Like it's already succeeded in a market. I, I had an Internet conversation that I slammed shut with someone over the weekend. They, I, I was talking about Solana versus Ethereum and they said, yeah, well Ethereum has so much more TVL total Value locked. And the question I asked him, I said okay, what should the ratio of the market cap of a token be to his total value locked? My guess is market cap should be a fraction of total value locked because that's all the profit that you can actually make. Of course Ethereum's total value locked is one fifth of its of its market cap. So you can't look at things like total value locked to justify a market cap in Ethereum of more than a 90 fall from here would effectively get you.
- [12:42]
Scott Melker
What you can look at is the developers and you can look at that's multiple, multiple X's of vent.
- [12:50]
Mike
That's right, you absolutely can. I'm not bearish Ethereum, I still own, it's a much lower percentage of my portfolio. But what you can look at is what's the total addressable market for layer ones in a world where we want to revolutionize and should revolutionize all of the plumbing underneath multi, multiple, multi trillion dollar markets. And that's why Ethereum's market cap is stubbornly high. That's why the market cap of crypto is actually arguably in aggregate but we don't know who the winners are and, and that's what. But the bitcoin point I think is really important because what happened on Friday was quite frankly exactly what people like James and I and I don't want to put words in your mouth James. If, if I, you had told me what did I want to get said, that literally is what I would have wanted to have been said.
- [13:41]
Scott Melker
We're gonna unpack that too. Go ahead, James.
- [13:44]
James
God, there's so much to unpack. Let's start way, way, way up at the top back with what Mike was talking about in the economy. You know, I mean first of all the market hates uncertainty, simple as that. We have no idea what is going to come down the pipe with tariffs. We don't know exactly how the government firings are going to impact the economy. That was not in the numbers that came out on Friday with the unemployment. So that's an important distinction here to make that that number, that Friday number wasn't great and didn't even include the government firings. So and now you've got, you know, you've got the new Treasury Secretary Bessant coming out and saying like there's going to be short term pain, we expect this and it's okay. And so, and they're calling it a period of transition. Right. And so why are they doing that? Well, you can look at it from politically a lot of different angles. But it's pretty simple. Trump wants lower interest rates. Right. He knows two things. He knows that the Fed is not going to listen to what his demands. We. They've, you know, Powell has already come out and, and said that he's already come out and, and his stance has, has been diametrically opposed to whatever Trump says for, for weeks. And so he knows that part. And then he also knows the Fed, the Fed can't even control the long end of the curve. Like that's not. The Fed can't control that. What controls that is, you know, the, the economy and bond traders, their, their take on the economy and their analysis on the economy. Where it's going. Are there going to be too many bonds that are going to be issued in the future, which means that there's going to be pressure on, on interest rates higher for, for the longer end of the curve or is there going to be inflation pressure, which means that there's pressure on the long end of the curve for, for rates to go higher. That's what we saw. But in the last few weeks, we've seen the long end of the, of the curve starting at the ten year. Mike, correct me if I'm wrong, I think it's come down from 480 at the beginning of the year down to 420 or so now. It's kind of bumping around 425. Right. So that's a big move. And this is what they want. This is what Trump wants lower rates. So how can he do that and politically still keep his base motivated and, and not trip up the midterms to get it over with? They want to get this over with. There you go. Besson needs to re. He. They. These guys need to re. They need to reprice $10 trillion worth of bonds this year. $10 trillion. And so what are they going to, where are they going to do that? The question is they're going to keep doing T bills and keep kicking the can down the road, which is what they've been doing. As much as, as much noise that, that we heard out of that camp last fall, as much grief Bessant gave Yellen for pretty good reason. I wrote about this about not moving out on the curve. He can't move out on the curve yet. The rates are still too high. So they want rates lower. And that will be good for the economy long term, but there's going to be pain in the short term. And so, you know, we've gotta. Look, the reality is, Mike, Mike has been right that we the, the market's gotten ahead of itself. But now let's talk about bitcoin and the risk assets. Because the reality is that, that if you look at rates, if you look at liquidity, if you look at collateral, if you look at all of the M2 supply, we bottomed out in liquidity about three months ago, late, late last year, early this year. Right. So somewhere around there is when we bottomed out and we're rising now. But bitcoin is, has, has been a leading risk indicator for a long time. I know that everybody who believes in bitcoin, including me, believes that this, this is long term, not the way that this asset should be treated. However, you have to recognize with the market how the market looks at it. The market looks at it as a risk asset right now. That's reality. There's nothing we can do about that except keep adoption going. And so the reality is that this lags the market. Bitcoin lags the market by about three months. And so it's going to continue to lag until we have that diversion that, that Dave talked about. And it's, we, we're not there yet. So what we're seeing is that we've seen liquidity contract toward right into the end of the year, and now we're seeing it begin to expand again. And bitcoin's behind it. It's behind it by three months, but it's ahead of the others. So we had a drawdown of about again, Mike, correct me if I'm wrong, about 8% from the, the high of the S and P somewhere around there.
- [18:31]
Dave
Yeah, it hasn't eaten 10% yet.
- [18:32]
Mike
Yeah.
- [18:33]
James
Into. Into Friday. And now you, you know, you're having a, this, this, this is not capitulation. You know, we're bouncing out there at.
- [18:42]
Scott Melker
7.76 on Spy, which is actually the tradable asset that reflects that. Which, by the way, I had the chart up because if you are looking for a technical bounce on something, you've got the 200mA holding a support and you're just testing the July 24 highs, which was a high for, you know, a good few months. So. Right. Maybe, maybe, maybe we're in the overblown fear time for a bounce phase.
- [19:04]
James
Yeah, let's talk about, let's talk about the land. Let me land the plane on this part though, on bitcoin is that, look, you know, bitcoin still has, and I agree with Dave, more tailwinds, structural tailwinds than, than it's ever had that I know of. And so, you know, you, you, you have an, an administration here that has adopted this as a strategic reserve. Now why did it sell off? I've had so many questions about this. And it wasn't just buy the, you know, rumor, sell the news, although traders love that. It was kind of poised perfectly for this. Where Trump came out, he announces a reserve. He announced they're not going to sell any, but then he also announced that we're not going to buy any either. And so that, that was priced in. When, when you're a trader and you're looking for an event like this is an event driven situation for many hedge funds and many traders, meaning that they look at the, they look at the price of, of the asset that they're, they're trading at the security, they're trading whatever it is and they, and they price in the upside and a probability around that. Right? So if, if you have an asset that's trading at 100,000 and if it, if the event means that it would trade to 200,000, if the event happens right, then you attach a probability. If it's a 50, 50 probability on that event happening, then you, it should be trading around 150,000. Everybody get that math? 100,000, $100,000 gain, 50% probability of that 100,000 gain. That's $50,000, that's $150,000 where the assets should be trading. Right? Well, just think about in those terms. Bitcoin got ahead of itself. It was, it was, it was moving, it was staying high. Even though that liquidity had been drained from the system, it was staying up there because of this event probability and because of all the tailwinds. Well, the event was good, but it didn't give, it didn't give the traders and these, and, and these investors what they wanted for that full event probability, for that full event to be priced in. So it sold off. That's exactly what happened.
- [21:13]
Scott Melker
It's still astounding to me though that you get a strategic bitcoin reserve and $5,000 drop in less than 30 minutes. Listen, I'm not surprised, as you said, but it was very quickly clarified that there is a plan or a path to acquiring more bitcoin. It's just not the print money. And do it as a budget item. Yeah, there's a lot of budget neutral ways.
- [21:34]
James
It's a concession. It's a concession that, yeah, we'll buy some, but it has to be budget neutral. Why? Because, because this administration does not want to be accused of using US Tax dollars to drive up an asset that, that will make a bunch of crypto bros rich. And that's, you know, that actually makes.
- [21:54]
Scott Melker
Reasonable, you know, nobody wants to add to the debt. No bitcoiners should rationally want to add to the debt. That's the irony of all of this is that bitcoin sells off a bunch of bitcoiners selling their bitcoin because we're not going to buy it. But anyone who's a true bitcoiner wants the debt to come down and wouldn't want that to happen anyways. But it is important that Treasury Secretary Bessant went on TV and a roadshow completely the next day saying we are exploring opportunities to find budget neutral ways to add bitcoin. We said the first thing we need to do is stop selling. The second thing we need to do is prioritize the asset. The third thing we need to do is find ways to buy it. The quotes were amazing. Yeah, right.
- [22:33]
James
Yeah. It's also, it's also if you're, if you're a trader and you're an investor, you know, think about it. If you're the US government saying, hey, we've got a bitcoin reserve, we're going to go buy a million bitcoin, what the hell would bitcoin do? It would rip.
- [22:45]
Scott Melker
Well that's always, Dave always makes the point you're not going to front run yourself. Right. Obviously. And the game, this is actually a.
- [22:52]
James
Very good solution to that.
- [22:53]
Scott Melker
I want Mike to jump in the game theory here. Obviously. By the way, if you look at the math, I mean, first of all, it was a little bit eye opening that the executive order said we need to do an audit. Effectively them admitting that they have no idea what we own or where it is. Which has been a lot of conjecture about that. But there's also conjecture the United States government and marshals have sold a bunch in the past few months. So we need to get the number of what we own. High end, 200,000, low end. If Bitfinex gets returned, which it should, maybe 100,000. China owns 190,000 ish bitcoins. Are you going to tell me that the United States is going to let China own more bitcoin than the United States when we've added it as a deemed as a bitcoin reserve asset? I don't think so. Go ahead, Mike.
- [23:34]
Dave
So we're talking about one of the biggest from history. From the future we're going to look back at this as one of the biggest, most significant buy the rumors, sell the facts situation they've ever heard of. And so first let's debase, debunk some of the silliness that we just heard some of from Dave, that bitcoin is going to put out the same value as gold. That's very silly because I have gold in my body. Can't do that with bitcoin. And I pointed out very clearly six months ago and maybe even before, when Bitcoin ETFs reached parity versus gold ETFs on a risk adjusted basis, that was probably near the peak. Near the peak. Right now we have Bitcoin ETFs running around 115 billion and gold ETFs pushing their 250. See a bull market there. Gold ETFs are heading higher. We said two months outflows in Bitcoin ETFs. Trade's over, gentlemen. The trade is over. I'm just. You're not someone to blame. Blame McGlone, particularly if the stock market goes down. And that's where I'm going to point out the silliness of beta. Anybody who runs a risk management position, which Dave has and I have and knows if they have anything in cryptos on that position, they've gone down a lot more than beta. Right, because beta has gone down and they're going to continue to go down. In my view, yes, we're going to get bounces, but it's just getting started. The significance, what happened with this new administration is shocking. Remember, rich people didn't vote for Trump. I'm from that part of the world where 55% of the country are wage earners. Those are people both for Trump. They don't really care about the stock market as much, but they do care about deflation. And when their gas price goes down to two bucks, Trump can say he helped do that. That's going to happen. It's just a matter of time, particularly if the stock market goes down. To me, that's the key thing that's kicking in here now. And with bonds and what's going to happen with bonds, you get the stock market to go down, there's only one force to get the Fed to ease. Powell said on Friday, everything's fine. He's not going to ease until stock market goes down and makes him. This is something we talked about a year ago, and he decided to ease too early. That's when we'd be able to balloon the deficit out to the. Not balloon it to the longer end of the curve. So let's point out that part of I still think the best performing assets this year will be U.S. treasury long bonds. You want some of the blame? Blame me because I just see it happening. I've seen it happen in 1999, same thing in 2007. Each time I was early. This is just more extreme. So this morning I just did a little analysis versus Canada in Tenny notes. Canada's 1/10 the size of US basically bond market economy, inflation, population, everything. Yet their 10 unit yields less than 3% even though their debt to GDP is higher than the US. And then I look over at the you can one thing we can do versus that TSX and S and P. We can go back almost 100 years for about 90 years of that was stuck near the same level. And Then also the US breaks out higher and US yields right now are about 130 basis points above Canada. I think they're going to just drop to 3%. We just need a trigger maybe saying below that 200 day moving average in bitcoin first because bitcoin leaves everything and which is not underestimate what we have in terms of the government's not trying to pick winners in cryptos. If they at least followed an index and this could do for now. They're picking winners and there's 12 million of them. Bitcoin's just one. I just point out, yes, this is a former very bullish crypto person. I look at this space now as I hear it from crypto people all the time, particularly on crypto crypto town hall on Friday and I'm glad you didn't ask me to speak because I listened to that. I'm like oh, this is one of the most extreme things I've heard this stuff in 99. I heard it in 08 and it's I hear everybody saying yes, praise the Lord or place the crypto gods and I say pass the ammunition.
- [26:53]
Scott Melker
To be fair. On Friday we were discussing the strategic bitcoin reserve announcement that happened just hours before.
- [26:59]
Dave
Exactly.
- [27:00]
Scott Melker
From a place even in a vacuum. You have to admit that's a pretty fundamentally important event. It was regardless of what happens to price.
- [27:06]
Dave
It was on the way up and now we got it. It's not a bitcoin reserve now. It's a strategic crypto reserve. And how much of that is? No, it's not. Okay, so he's buying bitcoin, Right. So we saw how much of that.
- [27:18]
Scott Melker
The digital assets was throwing scraps to the dogs of the industry to give him donations. The digital asset style will never be added to. It's a rounding error for the market cap of these assets. It's nothing compared to the amount of.
- [27:33]
James
Likely to be likely to pull it off. It's likely to be sold off to buy Bitcoin in the correct that's one.
- [27:40]
Scott Melker
Of the budget neutral strategies is actually dump dump the Solana and Ethereum and stable coins that are sitting there and.
- [27:46]
Dave
Buy so I'll point out the key thing I pointed out last year we were talking about this whole crypto space is leveraged beta. Beta is going down. Leverage beta is going to go down a lot more and it's going to continue to go down. Sure mostly bounces but what stops it we got to get through this period of Doge is just getting started. The tariffs are getting started and the number one thing from those tariffs is corporate profits. We'll go down.
- [28:09]
Scott Melker
Who wants to go?
- [28:10]
Mike
I I'd love to respond. I mean honestly, I hate to say it but you know there's a lot of Peter Schiff in what you just said and you know his own golden all I would phrase the people who had seashells saying yeah this new gold thing is feel very, very similar in a digital world.
- [28:36]
Dave
There is very similar to seashells in, in cryptos there are 12.4 million unlimited supply. Seashells have an unlimited supply. Very similar.
- [28:44]
Mike
No, we're. Let's at least agree to divide bitcoin from the rest of crypto because there, there is, there is definite truth buried within the silliness of that last comment.
- [28:55]
Scott Melker
It's not silly.
- [28:56]
Dave
Just look at why is. Why is Bitcoin down? Because everything else is down. It's just it has a much higher correlation to all the other cryptos including Dogeco does to beta. It's a fact. Okay, you can tell me Facts will change.
- [29:08]
Mike
Correlation versus causation.
- [29:09]
Dave
Dude, you're telling me it's going to change. I'm just pointing out it's not going to change.
- [29:14]
Scott Melker
I don't think that bitcoin is correlated to those assets. I think those assets are.
- [29:19]
Dave
There's a lot of people who are told by ETF producers and you know, ETF providers to buy Bitcoin above 100 grand. Now they're at 82. They're starting to get stopped out. What stops that?
- [29:29]
Scott Melker
Yeah, those outflows are proof of that.
- [29:31]
Mike
Well, most of the outflows were basically the collapse of the futures premium which if you look at the futures premium it's actually kind of fascinating.
- [29:39]
Dave
Futures open interest has collapsed.
- [29:41]
Mike
Yeah, well the. But there, there's reason I mean the.
- [29:45]
Dave
Specs are getting out. Specs are getting out of futures. That's the arm, guys.
- [29:48]
Mike
Okay? You can't, unfortunately, this is like trying to fight circular arguments. So let's, let's pick one at a time. Seriously. Because this administration is a massive sea chain. Things which are going to change crypto valuation. I've been saying both number one, things that have no utility or no value are not going to necessarily be prioritized. The reason memes were prioritized was because frankly, you couldn't build anything. Because according to Gensler's view of the Howey test, if your efforts led to increased value, you couldn't buy, you couldn't issue it in the United States, so US Investors couldn't touch it. That is changing. It is clearly changing. All the cases have been lost, so builders no longer need to do that. The people in the mean worlds haven't figured this out yet, but they will, because frankly, memes are memes. You know, honestly, Elizabeth Warren isn't wrong about that. You know, the Beanie Baby notion. I've been saying the Beanie Baby analogy for years. Beanie baby or Birkin bag? When you're in the memes, is Doge the one Birkin bag out of all the memes? Maybe. Is 26 billion a reasonable price for it? Who the hell knows? It could be higher, could be lower. I don't know. I don't have any particular viewpoint. If you said the exact same thing about all the others, I would say 99 point some number of 9% of those 11 million memes are going to be worth nothing. Just like pets.com was the pat held for Internet stocks that were worth nothing, but there were thousands. There was 14,000 of them. Now, admittedly you couldn't just go on pump fun and create a crypto, right? But if you look at the number of coins on coin market cap, it compares quite favorably, actually lower than the number of Internet stocks that were created in the OTC market back then. So it's actually very, very, very analogous. So we could talk about that. But let's focus right in on bitcoin versus gold, because that's where I think you're absolutely off the rails. Gold, some percentage of gold is its monetary value. I think it's like around 80%. And that's what I think bitcoin gets parry passu with. If you understand that platinum is 30 times more rare than gold, that for most of our lifetimes platinum was more expensive than gold, and it's now one third the price of gold that Is like arguing. There are people who probably said, well, platinum could never get cheaper than gold. And then, of course it did. It actually peaked at one fourth the price of gold at one point. Point, you know, 20 years ago or 25 years ago. But platinum is rarer. Right. And it's used in jewelry. Platinum and palladium both have been dramatically higher than they are. Why aren't they as high? Well, palladium went crazy because of its need in catalytic converters. But we have these things called electric cars. And electric cars don't need catalytic converters. And so the demands are. Are decreasing. And so people aren't putting a premium on it as well, as well as new production came online because like all the other commodities that you talk about that I agree with you on, we have the ability, because of the elasticity of. Of, you know, price to demand and supply. We have the ability to get more bitcoin gold. We have the ability to potentially to get more. We have an asteroid coming close to the earth. Right. You know, at some point. No, don't you.
- [33:07]
Scott Melker
Willis was great.
- [33:09]
Mike
No, no, I mean, it. It's. The point is, is gold is a commodity that we might very well be able to get a lot more. You won't get more bitcoin. Do I really care about that? No, but traders might if we ever get to that at some point, 20, 30 years from now. The issue is the monetary component of gold. Does gold make sense as a monetary component? Remember something, and this is important. In 1971, gold effectively was 100% of monetary aggregates. Today, it's somewhere less than 7% 12. So there. There's room for a lot of things here. So, you know, you can talk about. It's in your body, but the truth is, that's the sole question. And you're right. There are people out there who will come to bitcoin kicking and screaming because they're saying, well, I can't see it and touch it. But these are the same people who have no problem doing everything virtually and on the Internet, using their phone and using swipe cards to buy stuff. Just understand, virtual assets can have value. If you say they can't, they can't. If they can, they can. It's a binary. And that binary replicates out over 7 billion people. And we'll see whether it gets dominant. My point is, with it as a strategic reserve asset, more people are going to be convinced that it can be. And that's the issue. So you can say what you want about what came out. Traders were looking for how much will America buy? Investors are looking for what's the signaling to other investors and that's the difference. And you know, look, you could, you could disagree. What I'm talking about is a much lower time preference. I have no leverage in my portfolio. I sleep like a baby because I have no leverage. Were I leveraged, I'd be terrified. Right. You know, I'd have that clutching fear that happens. By the way, the more I feel that clutching fear, the more I know we're closer to a bottom. You know, whether it seems like everyone in the crypto world thinks 70 or Tom Lee thinks 60 is in the cards, I think I don't care. I just know that the back half of this year we will have the regulations so such that Morgan Stanley, Goldman Sachs and everyone on Wall street can start offering bitcoin. We're seeing every day new announcements of banks who can start offering bitcoin.
- [35:19]
James
And there it is. That's the most important part that people aren't talking about. Yeah, we do have a strategic reserve and it is different than the, you know, the stockpile. Mike, I agree with, with Dave. You, you have been right about the, you know, the, the eventuality of a, of a mean reversion of the, of the stock market. It's, it's, it's, it's true. And so the liquidity didn't catch up quickly enough, but it is expanding. That's, that's something you have to realize. And you know, structurally I'm, I'm with Dave where I have a, I have a very long term view. I mean I have a, an investment firm that focuses on bitcoin and bitcoin companies and we are very excited. I mean I'm seeing things that, that are, that are, that will give us great opportunity in the near and long term future. And the utility of bitcoin is not just that. It's a digital, you know, meme that's just that, that's just incorrect. It really does have value. Will it, will it eclipse gold in this cycle? I don't think so. Will it eclipse Gold eventually? 100. I, I mean 99.9. It will eventually eclipse the assets of gold. And why is that? It will demonetize it. Why is that? Because it has better, it is better at everything that gold does except for wearing it as jewelry. There's, that's the only thing you can't do with bitcoin. But you can walk across the border with it. You can walk across the border and actually you're not even also do that with tether.
- [36:54]
Scott Melker
Do you remember that? Remember that brief moment was selling a necklace that had a ledger on it and people went absolutely nuts because you could literally wear your bigger.
- [37:02]
James
You can, Mike, but, but if you're, if you're storing your money in tether, then it's debasing every single day.
- [37:08]
Dave
USDC. Well, yeah, but you're not happy. You didn't drop 30% from the peak in volatility. So let's look at the difference here. I'm glad we went there because what we're proving right now, bitcoin is leveraged beta. It's a very highly risk, highly volatile asset. It's in the mainstream now. Great. You know, four or five years, six years ago, one of us wrote about. It was really much just a niche product. Now it's mainstream. Everybody loves it. Even our presidents, all invested. Great, love it. So it's just a classic sales signal. Now look at the whole space. It's not. The whole space is very, very much leveraged beta. And to me, this is 1929, 99ish as far as extreme asset valuations that just on the back of the US Stock market being the most expensive industry, maybe it's going to start going down. That's all I'm just pointing out. And it's Trump administration who probably not saying it, but they know if they get that equity to go down, they're getting yields to go down, they get inflation to go down, to be able to, you know, sell, sell deficit debt a lot higher and get it done before the midterms. This is a trade that's just getting started.
- [38:05]
James
When you, when you go to a cocktail party, how many people, you know, own bitcoin at that cocktail party?
- [38:09]
Dave
Well, it depends on what?
- [38:10]
Mike
The age.
- [38:11]
Dave
If they're, if they're under 40, almost all of them, if they're over 40.
- [38:14]
Scott Melker
James, they have the boomerang population.
- [38:16]
James
There's 4%, very few people who actually own it. That's the incredible part. All this talk, all of there is so. There has been so much just misinformation and disinformation in the media, the mainstream media about bitcoin versus all the other cryptocurrencies that people still do not understand the difference. I still get this answer when I ask people at, you know, friends and, and people around me that are not in the space, which, look, we're in a bubble here. We talk about this stuff every single day. But the reality is when I ask people, do you own bitcoin? They say, yeah, I own the ethereum one. They still don't understand, they still don't.
- [38:57]
Mike
Get it, the ripples.
- [38:57]
James
It's not that they're dumb. It's that misinformation every single day. And if you're not out there actively looking for information, actively researching and being curious yourself, you're going to be fed the wrong information and you're gonna, you're not going, when is this going to really take off?
- [39:15]
Dave
That's David.
- [39:15]
James
Dave, hit it on the head. Now, hold on, let me just finish this one sentence and then I want to hear what you have to say, Mike. But Dave, hit it on the head. And then it really takes off. When the mainstream banks, the big banks can profit from it. And guess what? Now they can hold it as an asset. Now they can create different products around it. Now they can create lending products, collateralized products. They can create loans on it. I was just in, in Jackson Hole and we were, we were talking about battery finance with Andrew Hone, and I was, I was talking to Andrew about it. This is something that is new where you're going to be able to take Bitcoin. You're going to use it as part of your collateral for different kind of lending products and borrowing products. This is huge. And when you get J.P. morgan, Merrill Lynch, Morgan Stanley, Citibank, Wells Fargo, all these banks involved and they're able to do this, they're going to offer and they're going to make the distinction between Bitcoin and everything else purposefully. Now it's going to happen now. But up until now, there's so much confusion around it. And so that is a mat. That's a massive sea change that we haven't seen yet. And we're, we're not going, it's not going to be overnight. That's the best part about it, is that the way that this adoption is happening is it's taking a very long time, which gives me confidence that structurally it's going to be a much stronger asset than anything else that we've seen.
- [40:37]
Scott Melker
I want to.
- [40:38]
Dave
Stock market goes up.
- [40:39]
Scott Melker
Yeah. Really quick. I want to show you something interesting. So I brought this up really quickly. Only 4% of the world's population holds Bitcoin. Actually, I thought that was high. I would be interested, I would be interested, to Mike's point, to see how many of the people below 30 or below 40. But I would argue that most of these people, even who are in crypto, Mike, and I know I keep saying this, they don't own Bitcoin. You're making an assumption that people want in other crypto.
- [41:04]
Dave
You're making one key assumption. A lot of people don't care.
- [41:08]
Scott Melker
I agree. Oh, no, I think, I think 90%. I want to show you guys something. I noticed this yesterday. I immediately texted Jason Yanowitz from Blockworks when I saw this. Blockworks, incredibly, does disclosures of everyone who works there and what they own. These are crypto native people covering crypto every single day. James, if you want to see your point. Now, some of the editorial staff probably says, hey, we're not going to buy the thing we're reporting on to their point. But most of the people even who work at some of the biggest crypto agencies and media companies, most of these people don't own any of it. Even the ones who work on it and cover it every single day. And then when you even go down to the research team, only about half own bitcoin. Most of them are in altcoins. I think the younger generation is doing this pump fun over here. Although pump fun Mike, by the way, has fallen off a cliff and is lower than when it launched for daily profit. So that's done. The meme coin thing you keep pointing to is, at least for now, is a rounding error. Again, it's done. But I think that most people, even the ones who understand it, don't actually own it. And even less of them own bitcoin specifically because most people come into crypto through speculating on other assets.
- [42:21]
James
Right. Well, you got to bifurcate two things too. And thank you for that info, Scott. And that's, that's exactly, that's exactly right. So, but you got to bifurcate two things here. Mike, you said that bitcoin will only go up if the stock market goes up. Okay, let's, let's, let's unpack that. Will the stock market go up in the future? And I mean, we, we will have drawdown.
- [42:41]
Dave
It always goes up.
- [42:42]
James
Okay. Why is that? Because of, because of the denominator. The denominator. Because the dollar, because of the debasement of the underlying currency. It's not because, you know that companies are expanded. That's one thing. So long term, stock market will go up. Long term bitcoin will go up. Okay, that's just one part of it. The second part of it is you have to bifurcate the bitcoin. Demonetizing other assets. Bitcoin can demonetize other assets while everything else stays constant. Bitcoin can gather more assets because it's demonetizing them. It's easier to own Bitcoin than it is to own a piece of art. It's easier than a collectible. Now some of those things you do because of emotional or, or whatever purposes that you like to see the, the jersey on your wall, or you like to see the, the football in a case, or you like to see the.
- [43:30]
Mike
Piece of art up there, banana tape to a wall.
- [43:33]
James
Banana tape to a wall, as long as you don't eat it. And then the, you know, of course, of course there is, there is, there is money laundering that happens with art. I get that. That's a whole other thing. But you know, the reality is that bitcoin will demonetize other assets and it won't be just art and collectibles, it will be bond.
- [43:50]
Dave
But you're saying that as a fact. Let's, that's your opinion, I appreciate it. But let's not say this. Facts, I'll point out facts. Facts are bitcoin's the first cryptocurrencies. Now there's 12.4 billion if not more. You can create them with nothing, takes nothing. It's unlimited supply like seashells. And we.
- [44:05]
James
It's not the first one. It's the first one that has really been adopted, which is not.
- [44:09]
Dave
Pete, repeat the same things that those of us who are really involved, certainly you were all were 10 or eight years ago. Now it's the mainstream. It's over ot ETFs. People are selling, they got it, they bought into the hype. I've seen this in commodities, I've seen this in housing, I've seen it in other markets, I've seen in stocks.
- [44:26]
James
You have, you have been a long term bitcoin advocate. You think that, you think it's over that bitcoin, that's it, it's the thing's over peak and it's good. It'll never get, it'll never get to it.
- [44:36]
Dave
I'll never say never about anything. But no, I think the hundred thousand level is equivalent to the NASDAQ 5000 in 2000. We all remember that almost a G. Exactly 25 years ago today. The sentiment I see here, the valuations I see here and I have to admit, yeah, so it could go back to 10,000. But when you say that it's, it's just that I've it just some of the valuations and some of the people, the things that people say that, oh, these aren't bitcoin, I get it, but there's 12 million bitcoins now they're related, they're cryptocurrencies Sorry, but they are. I just. And I.
- [45:08]
Scott Melker
You know, even coin market cap has now lowered what they covered. 35,000 is much better. But we had. Listen, this is 14 million 463 addresses on pump Fun. That's what we're looking at. They've launched 8.2 million tokens on there. These things are all gone. All of them. They're gone. They don't exist. If you count 11 million competitors as things that are worth zero and existed for one hour, then yes.
- [45:33]
Dave
How about unlimited? Unlimited supply. That's the point. Unlimited supply. The key thing is we're talking about something that's in the mainstream completely now. It's not the time to go.
- [45:43]
Mike
Here's the simple point. When you're forced to eat those words which are completely false. Actually, of all the things you've said in the couple of years you've been on the show, the notion that bitcoin has unlimited supply because it could be copy cryptos is. I understand, but bitcoin, unlike gold, unlike anything else, has completely limited supply.
- [46:07]
Scott Melker
Isn't there an unlimited.
- [46:08]
Mike
That is.
- [46:10]
Scott Melker
We're talking about all metal versus gold. Can't we say gold is an unlimited supply?
- [46:14]
Dave
There's only four.
- [46:15]
Scott Melker
That's metal in the earth.
- [46:16]
Mike
Hence my, hence my point on platinum. Look, there were people who own silver years ago, going back to Williams, Jennings Bryan, when gold, for centuries, centuries traded between 15 and 20 times more than silver. Why? Because in the earth's crust, gold is 15 to 20 times rarer than silver. And then all of a sudden as prices, the industrial revolution happened, people needed more portability, etc. Etc. Prices start going up and all of a sudden gold now goes to somewhere between 52. Well, it's closer to 85 now, but between between 50 and 100 times. So that massive thing broke. Do you not think that there were people who owns silver said, oh, it's got to come back. I hear people talking about silver going back to the 15 to 20 time. 15 to 20 ratio to gold all the time. I actually think it's going to happen. It's going to happen when bitcoin demonetizes gold, you know, a decade or two from now. But. But the point is, is that you can't rely on past like you.
- [47:17]
Dave
You argue you can reply on performance. Let's not, let's fix the word beta.
- [47:23]
Mike
That actually manages risk. The way you use it.
- [47:26]
Dave
It. Nobody but everybody who bought into the. The people who bought into the ETF mantra for bitcoin were told that it's a lever. It's not leveraged, but it's like a digital version to go that's gonna outperform the stock market and it's a risk off asset. They're being proved wrong. They're being proved. The things I've said all along that bitcoin is great. It's the fastest horse in race as long as race. The market's going up now the market's going down. It's the wrong asset to be in the market going down. So if you're bullish, bitcoin, that's great. You better hope the stock market goes up. And I think people are hitting those stops now. Maybe it'll bounce from this 200 week moving at 200 day moving average. My point is the actual people who run this money are getting it and they're realizing this is a great asset as long as the stock market is going up. Now I realize I'm in an asset that's making me lose more money than I did before because I over bought it when I could have been.
- [48:08]
James
Let me ask you this, Mike. If the market draws down 30%, would you buy bitcoin or not?
- [48:13]
Dave
It's exactly, again, it's, I can't, I don't know if I'll put a bullish recommendation, but right now I've been tempted as I was bold enough to put, you know, was 10 grand, you know, five years ago. Say it's going to add a zero. I'm thinking it's just going to take off a zero. I'm not going to publish on it yet. I'm thinking about it, but because I have to point out the difference now is every single thing I see is everybody's so bullish. I've seen this before. It's like the days I've been at trading pits. I call up every customer and they're all bullish and you know they're going to be wrong.
- [48:42]
James
It's just, man, I don't, I don't see a lot of everyone's parents in my world.
- [48:45]
Scott Melker
Yeah, I gotta say, if we're gonna, if we're gonna talk about Friday after the strategic bitcoin reserve on Crypto Town hall being all the top signals you could ever find saying bitcoin never goes higher, the ceiling is in forever. Might be the greatest bottom signal I've ever heard. I'm not saying specifically even from you, but I'm hearing that a lot like I'm hearing 60, 50, 70. I don't hear anyone saying we're going back above 100 right.
- [49:09]
Dave
Now the good news is then that we've so. So the guy who's been completely wrong about selling it 100 grand. Got it. You know, they keep throwing me under map for that. I mean, yes, I was earlier, but. Okay. The point is now it's a certain point in my fiduciary duty I think sometimes is to help people not get involved in this highly speculative digital asset for the wrong reasons. And that is yes, it's okay to get long this up. Remember what you're getting long and why. And then there's things like there's the correlations. It's the facts of markets is. That's what you're seeing by the outflows finding out because all the alts go down. Ethereum's at two grand. Finally at 4,000. It was too expensive. The facts are when, when some of these, the whole all space goes down, Bitcoin goes down with. It just goes down less. And here's how I think, I really.
- [49:54]
Scott Melker
Do think it's the opposite.
- [49:56]
Dave
Okay, well the point is market's going down, so. And I'm wrong. I agree.
- [50:00]
Scott Melker
I'm just saying I really, really do deeply believe from looking at this market for so long, when bitcoin goes down, everything goes down more. It's not when everything goes down, Bitcoin follows it. That's just, that's just not correct.
- [50:14]
James
And when the market draws down 30% percent and Bitcoin's down 50% that that is the time to buy Bitcoin because.
- [50:22]
Dave
But typically if the market drops down 30, Bitcoin will draw down 70. TIP. Historically, in base sense volatility. That is true.
- [50:29]
James
Maybe and maybe.
- [50:30]
Dave
Okay, now it's down with 30s P500 on the year. Okay. On the year Bitcoin's down 13s 500.
- [50:38]
Scott Melker
Yeah.
- [50:38]
James
But just talking about peak.
- [50:39]
Mike
Okay.
- [50:40]
Dave
From peak. Okay. Yeah, tradable. So it's got to be.
- [50:42]
Mike
You can't compare bitcoin or crypto to the S P. You can compare to Nvidia though.
- [50:48]
James
Yeah.
- [50:48]
Mike
They're individual assets. So you know, you got, so look, we could talk about all this but everything you said boils down to a very simple point. It's momentum investing. There are people who, if you bought the ETF as a momentum play. Sure. Then you're, you want, you have stops and you're out. If you bought the ETF because you say Bitcoin is at a 90 or you know, anywhere for it was at an 80, now it's at a 90 discount, whatever it is to what intrinsic value would be if it demonetizes gold vis a vis fiat. You don't give a fuck. You're sitting there with your bitcoin in your 401k. You look at it and you go, okay, well it kind of sucks, but it's not horrible. I've gone through worse. If you're looking at Nvidia on the other hand, you're looking at it saying, okay, it's gone down just as much actually more. And you're looking at saying, oh my God, what's going to happen? Are those people stopped out of that? Maybe some are. But if you're a long term believer, then you're like, you know what? I know what happened if I, if I got stopped out of Amazon and at the wrong time. Although Nvidia is so big that it's, it's a bad corollary to that.
- [51:51]
James
Bring up this chart.
- [51:53]
Scott Melker
Okay.
- [51:54]
Mike
I mean it's really about momentum versus value. Right. It's the old meme where the door, where you have the two people, one Bitcoin 100K and there's a line out the door to people to buy it, 1 bitcoin 80k. Where the line is, is nobody. You know, that's the old.
- [52:09]
James
This is, this is all the people who bought that, that ETF, Mike, that's. Those are the people about the ETF. Yeah. Some of them may have sold up at 80 and 90. This is the, the FBTC. Pretty good proxy that and I bet. Or bitwise, you know, but this, these are people. Look at the volume. Most of the volume was down here at 60.
- [52:29]
Dave
Yeah.
- [52:29]
James
Right at the beginning. Okay. All the way to the left. That's where most the volume was. Look at that hump. Most people are still in profit it. So they're not upset. They've actually doubled their, their money or, or close to, you know, so that's the reality. It's not everybody who got into etf. And just like you said, let's talk facts. I agree. It's my opinion that, that bitcoin will demonetize other assets like bond and bonds and, and real estate in the future. And it's also, you know, it's not true that everybody in the ETF has, has lost money and they're all dumping it now.
- [53:04]
Dave
I wouldn't say that but, but the point is it what you said makes complete sense. It could happen from 10,000 bitcoin versus not 100,000 could easily. My point is what's happening right now with this year is just getting started. Tariffs have barely started. Dosh is barely started. Bitcoin's going down. ETFs are flowing out. Gold's going back up. ETFs are flowing in after four years.
- [53:24]
James
Of outflows and what happens and what happens when the, when the Fed lowers rates because it's blinks it's.
- [53:31]
Dave
It's going to lower rates when risk assets make them and Powell made that clear on Friday there's no reason to low rates everything's fine risk assets make that happen Remember we. We are there's only none of us were alive the last time we had market cap to GDP on the way up reach 2 times GDP it's just starting to roll over for good reasons just starting See I agree with that.
- [53:50]
Mike
And I think that you're right about about the the stock market. The real question is what else is factual what is factual is that speculation and the use and the futures as the only method for U S firms to be able to express long demand in bitcoin is ending and as a result now the market internals are people who had the long ETF short futures trade don't do that anymore so that's going to take all the a lot of the crap and it actually has that's your Japan carry trademark the end True the if you want to speculate in crypto anywhere in the world you use memes that is ending it doesn't mean there won't be an attention economy doesn't mean there won't be memes. Memes are as tales old as time just expressed it. I mean hell for a long time there are multiple stock market people buying stocks because of the stories, right? Yeah if you follow people like Bill Fleckenstein he used to call Micron the flying pig. Why? Because for decades it couldn't make a penny could not make a penny because they were competing with Samsung and others so they just had to to to gin the things up by raising money and building more fabs and lowering prices. Right. You know it's a. There's a lot of things that go on in markets. The only thing that I feel is a certainty and pretty damn close to a certainty is that there is a need for a digital asset that will have limited supply that basically I'm going to describe bitcoin. There's a need for it tether is dollars and you're going to see a ton of it. And by the way when tether wins and the USDC wins and more of the world dollarizes, you know what that means? That means more purchasing Power in the crypto economy and in the real economy together. And it actually makes it way the hell easier to buy and sell most crypto. And so it will. It's a demand drive.
- [55:45]
Dave
So remind you it's a good remind what it is. It's a casino. It's great by itself. Trade is a casino. I completely agree with that.
- [55:51]
Mike
What's the stock market? Anyone? Look, you know, I spent a lot. Yeah, I don't care if it has fancy words like 401k or Wall Street. I worked on Wall Street. I worked at one of the, one of the most successful hedge funds in Wall street history. Okay. You know, you know at Two Sigma this is not, I'm not coming from whatever. The fact is casinos are casinos. The difference between Wall street and casinos is Wall street is highly regulated and over engineered and there's a thumb on the scales in favor of firms such as the one I ran. Whereas actual markets, if they developed correctly wouldn't have that thumb on the scale. Now is it as big a thumb as people think? No, retail equity traders don't really have a thumb against them. They just don't. You know they tend not to trade very well because they're not all that smart sometimes they herd follow like lemmings. But the truth is that you know, the retail equities are though we talk about the retail culture all the time. Keep in mind something. The crypto retail traders are treated like dog. They pay dramatically over more than an order of magnitude more in all in trading costs to get in and out of crypto than they do to get in and out of of Nvidia more than order of magnitude closer to two orders of magnitude more.
- [57:09]
Dave
Here's a question.
- [57:10]
Mike
What happens every time that decreases? What happens when that decreases? And it's inevitable you're going to get more of it. Just remember that.
- [57:19]
Dave
What does that mean for. So let's look at this. So we have Coin, Coinbase, right. It's one of the main publicly traded crypto casino. I'm sorry exchanges. Is it going to get a lot more competition from other, from other firms going public? Like I mean who else is there?
- [57:34]
Scott Melker
Kraken, Gemini.
- [57:37]
Dave
I live that. I mean I remember when trading in trading pits it cost 12 bucks for round term for futures. Now it's like.
- [57:42]
Scott Melker
Mike, I can also tell you to that point just as a you know, a matter of fact OKX is going to come back to the United States with a major presence in the current environment. Binance is coming back as Binance us to the United States. So international exchanges will also have a much more sizable presence in the United States. Coinbase I I'm very bullish.
- [58:03]
Dave
That means it's great for the casino for trading. But what we're proving just the key theme I've been making is where cryptos. Don't underestimate what Bitcoin cryptos it's leverage beta and beta is going down for now.
- [58:14]
Mike
Okay look the beta is factually is is a backward looking unstable relationship. What is a stable relationship? People you want to understand what ended what what ended the Internet bubble and brought us into the most stable bull market in history. Then at the world financial crisis from lower prices look back lower costs of trading was a major, major factor in getting retail back into the market. And when you're talking about Coinbase it's not a bad thing about Coinbase Stock Coinbase is from actual retail trading is down historically relative to custody and other they have. But the facts are the facts. Retail trading is going to get an order of magnitude cheaper and then another order of magnitude cheaper at the same time. Best execution is going to come in. People are not going to get fruit anymore. Market makers it will. Markets will mature. What we saw from the 90s through 2005 when reg NMS came in is more than a 10x in volume in equity markets as the cost of trade went down. These are long term factors. So when you look at those long term factors, understand that you have to be careful. You know there are, there is that none of this has anything to do with Bitcoin coin though. I mean it has a lot to do with all coins or whether it will be there. I personally tend to agree with you that I look at things, I look at some of these memes, you know, fart coin. I want all these things to be zero. All of them I want.
- [59:39]
Dave
Okay, so let's get through that period. And that's when I think it'll be time to buy gatecoin. That's my point. We have to get through that period and, and everything it's just dragging everything lower right now. That's I think you know it's just still doing it. I mean 70s the next level. We're talking about neat levels but it's. We all know you point that out. It's just there the thing that's certain is that the correlation between Bitcoin and all other cryptos the thing that's uncertain is correlation between Bitcoin and beta. Wow.
- [60:05]
Mike
Nasdaq drops 2%. No doubt that when Nasdaq drops 2% like it is now that bitcoin has dropped more or less the same. That's true.
- [60:14]
James
Everything.
- [60:15]
Mike
James is right.
- [60:16]
Dave
It's, it's. No, it's not. It's down about 7%. You gotta can do it from Friday. And Nasdaq's only measured from Friday.
- [60:22]
Mike
Well, three times.
- [60:25]
Dave
Yeah, that's it.
- [60:27]
Mike
Because no business trading this weekend. It traded down to 80. It actually is.
- [60:32]
Dave
Exactly. That's my point. But NASDAQ didn't trade. The point is the last time NASA was marked, no, NASDAQ is down what, 3% since Friday. Bitcoin's down 7% since Friday. That's a fact. Okay, three times.
- [60:46]
Mike
But Bitcoin traded as much volume this weekend.
- [60:49]
Dave
That's my point is. No, if you're holding it and as a hedge, I'm long bitcoin. I'm long bitcoin because I want to outperform the Nasdaq. I have one third of it because I'm, you know, I went outperform the NASDAQ with 1/3 of position. Well, you're basically keeping up. But NASA's going down. I mean that's. Think of it, people holding it. Not just trading it too.
- [61:07]
James
No. Well, you're thinking about such a short term. Short, short period. Mike.
- [61:12]
Dave
No, no, I'm macro. Okay, so if you sold some NASDAQ to buy Bitcoin, what, What do you expect for performance? Well, expect that fastest horse race to win. Right.
- [61:22]
James
When did I sell and what, what's the situation?
- [61:25]
Dave
I don't mean you, but if normal people. Okay, so, so okay. All this money that went in ETFs just comes from nowhere. It has come from somewhere. Typically comes from other risk assets. Typically. Maybe it takes some profits and cues and buy some bitcoin. Okay, if I, if I sell one unit of 100 units of QS and I buy 30 units of Bitcoin and market goes up, I should accept the same performance. And they're getting the thing. Same thing and the same. Done. That's my beta, I'm showing you. And everything is going down. Bitcoin's just going down more because it's much more of a risk, speculative risk. Gasket. People are learning. It's not like treasury bonds, which to me is. I'll point out right now you've got 2.95% in that Canadian 10. You know, I think that's where our long bonds going. Our 10 year note, he was going particularly first classes keep going down.
- [62:10]
Mike
And where do you think Nvidia is down 20% year to date, Bitcoin is down, down 13 and a half percent year to date. That is not three times beta.
- [62:19]
Dave
But that's okay.
- [62:21]
Mike
You have to look at it that way. You have to. It's a single asset, Mike, you know. Okay.
- [62:28]
Scott Melker
Determine which view we're going to take the multiple in in the six minute overtime right here. But I do love the heated exchange today. I think I'm supposed to go for crypto town hall on spaces obviously, but it seems like X for the third time today is completely down. So really what's happening? Yeah, X. X is, is not working at the moment. We did have other like by the way, really bullish news. I just showed you Stablecoin market cap over 200 million. Utah passed a bitcoin bill but left out the strategic bitcoin reserve part. They did the right to custody and protect miners. And Texas passed the Senate 25, 5 with a strategic Bitcoin reserve that will inevitably pass the Republican house and get signed. So the game theory is ramping up. I, I don't think that the bitcoin top is in forever personally, but man, it's going to be not even close. Mike, if you're right, McDonald's calls for me.
- [63:23]
Mike
Yeah, would you like fries with that? I gotta get that right.
- [63:27]
Dave
I mean, much appreciate the discourse guys. It really helps me hold my views and I really appreciate that we have great discourse. We help our audience make decisions.
- [63:36]
Scott Melker
Yeah, yeah, I, I could not agree more. I gotta run and figure out what the hell's happening with, with X. Guys, this is always amazing. Honestly. It's the, it's the best hour of the week. It's just so good and people love it.
- [63:48]
James
I, you know what, I hear that, I hear that continuously how people love this banter and how we, you know, dissect the market and, and we don't just all sit here and agree and it's important. And I, and I agree. We've gotta, we've got, you know, I agree to disagree and that's good.
- [64:04]
Scott Melker
Hey, listen, as a guy who's largely doing the interviewing and not giving opinions on a day to day basis, most of these strong opinions that I have, which are loosely held come from the discourse on these shows. I listen to what everyone has to say and formulate my opinion based on the information that speaks to me the most. So hopefully it's as useful for the people listening as it is for me. We gotta go guys. It's 10:08. Thank you very much. We'll see you all next Monday from Acro Monday Dave. Mike James, your legend. Thank you. Bye, everyone.
- [65:03]
Mike
That's dope.