A (6:10)

I was really hoping they had deep thoughts on Bad Bunny and the Patriots.

B (6:14)

Performance, but did you see that video with Trump doing Bunny? Who was it? It was so funny.

A (6:20)

I didn't see it. I was like I was putting my kid to bed during the. It was viral performance.

B (6:27)

I sent it to you in the. In WhatsApp.

A (6:29)

Is that what that. Okay, I saw something.

B (6:31)

Yeah, take a look at that.

A (6:31)

Yeah, definitely take a look at that. Okay, so a lot to unpack there. I think today. One of the rare times when I want to actually focus on bitcoin first because the price action last week was absolutely absurd. Right. We had the largest down candle by price. I didn't check by percentage. The longest down wick we've ever had on the weekly ended closing about $11,000. Wicked on that candle. I think the candle itself was 15 or $16,000. We had a day where we had the highest volume in many, many months of selling. And as we discussed, it was just systematic. Right. I mean, there was no bounces. It sold all the way down. But interestingly. And Mike, we can unpack whether this is dead cat bounce or bull trap territory, but the next day had equal volume on the buy side and completely basically retraced the entire move back up, leaving a lot of people confused as to what comes next. You know, there's a lot of reasons I think you can make the case. I did it on Yahoo. News the other day for the bottom potentially being in. I mean, you've got this very interesting graphic here of all the times that fear has gotten this low. Right. Has always been a buy opportunity before things go well. So I, I guess a worthy conversation here is did we see enough from the bulls stepping in in the 60s to make this potentially a tradable bottom?

C (7:46)

Depends how you define tradable. I think that's the answer. I mean, look, there have been a lot of stories out there. And the way bitcoin bear cycles go is at bottoms, you see a crescendo of stupidity just like you see a crescendo of stupidity at the top. But it's a different kind of stupidity at the top. You get everybody talking about how it's going to continue to go farther. You know, it's all euphoria, everyone's happy, popping champagne, yada, yada. At the bottom you get not just bears, you know, it's going to go lower. You get people who pull out these idiotic narratives that make no sense. And it happens every time. I mean, it's either the china stuff or the environmental stuff or this stuff or that stuff. This time it was the Epstein compromising bitcoin core developers, which is insane. I mean, James is shaking his head because it's insane. This time you get the people like the Financial Times who basically on the subject of emerging technologies, particularly bitcoin, literally pisses all over themselves every time they write an article because they're so poorly researched and they make no sense and then they embarrass themselves still further this weekend. It was one of the funniest things I ever saw. This foolish reporter who's been literally saying the same thing Since Bitcoin was 300, I kid you not, she would call Mike McGlone too bullish because she believes it's worthless. But that's cool. She's been saying that for six years. Except they published the article, Bitcoin is $69,000 too high. And then of course, when it did its Bart Simpson rally in the up phase, they changed it an hour or two later to Bitcoin is $70,000 too high. So of course, Pierre Rochard said, do you have any shame? Are you going to change the article back to 68,000 now or whatever the price is? I mean, it's just silly stuff. The other big narrative that's gone around Which I actually took the time to do a video this weekend about is just, just bad takes on notion of paper. Bitcoin, right. That all of a sudden it's not, it's not a. A fixed supply cap because people can create it out of thin air, which is completely absurd. In fact, the one thing that is interesting and, and we could dive into it if you want, or we could ignore it and people could just watch the video is that the, the. The inspiration for that is from GATA and the World Gold Council and other people who have been saying for 30 years know James's partner Larry Lard could talk about this far more in depth than me. Although I have been reading about this for 30 years that the gold supply and the gold price and the silver price have been manipulated and they use futures to do it. And that's all well and good. You can make the argument and even Grok will say there's a 20 to 40% chance that it's actually true at times. Maybe not a systemic basis. But here's the thing. Gold and silver have futures markets that set the spot price. Bitcoin has a spot market that sets the futures price. And that is a massive difference. And so for all the yahoos out there who keep parodying these talking points without understanding market structure, sorry, guys. Market structure does matter. And bitcoin has a very liquid spot market. There's this guy Kendall who I guess is an economist and people think he's smart. And there's this really, really dumb thread. I mean, dumb, but millions of views, Scott. Dumb threat where people are talking about, well, maybe bitcoin won't have a spot market because that's what's manipulated. It's like, are you kidding me? You people literally have lost the threat. I mean, you could debate whether it could. It will go up or down. And Mike and I are going to do that. But there's so much misinformation. Now why am I saying this? I'm saying this because this is exactly what happens at bottoms. It is literally what always happens at bottoms. Now, do I mean V. Bottom? No. Clear. I don't believe that we're going to see a massive rally from here. I think that we're going to consolidate around these levels, maybe a little bit higher, back into the other range, maybe a little bit lower. But I think we're consolidating here for a while. I don't see any reason to believe. Yeah, I mean. Oh, you wrote about it.

A (11:53)

Yeah, I was going to say you. You queued up, James. Perfectly.

C (11:58)

His entire newsletter is my base case is we bump around these levels and we end up in a hated rally out of it, which will be a grinding rally, which is exactly what I think is going to happen in silver and gold as well. Silver in particular, which I think will outperform gold. So. And we could talk about why. I think the markets are actually very similar. And my best guess is bitcoin and silver are going to become positively correlated over the next few months, which I think it's been negatively correlated over the last few months. So we'll see how that goes. But anyway, James, I actually didn't have a chance to read your newsletter this weekend. I'm too busy doing my own crap.

D (12:32)

If you get, if you go all the way, if you just keep going down. Scott, you could see the, there's a, an infographic I made on it that kind of explains. There it is. I mean the thing is people, they, you know, you're right. I don't like to go out there and just flame people because it doesn't, doesn't do any good, you know. But there are some bad takes on this. And you know, the, the spot ETF take has just been abysmal. Like people not understanding that spot Bitcoin ETFs have to actually own the corresponding nav worth of bitcoin underneath. They're just not getting it. They think that they're. It's all being rehypothecated and Coinbase doesn't have it or whatever it is. I mean it's just not, it's nonsense. It's not true. So spot ETF buying is, you know, I mean it's actually money that's going into bitcoin. That's true. That's absolute demand. There's just, I don't see any other way to see it. Unless you guys have a way around that. I don't see it. Yeah, of course, futures are our paper. Just like Dave is saying here. That's. But it's driven off of, of bitcoin. It's not, you know, it's not the other way around. You know, one of the things that happens is. And I tried to explain in here, right, or I explained in here pretty simply. And remember, everything I put in here in this newsletter is very simple. This is not for sophisticated hedge funds moving around this stuff. This is for people understand what these guys are doing. But the bottom line is one of the biggest trades that's out there is, is, is this basis trade and holding Bitcoin physical and selling paper against it and so that's just that it's just a way for them to play around the spreads and they do that. Options, of course there's, there's all kinds of activity and options and a lot of it has to do with hedging. We heard for many, many months here about OGs selling calls in order to monetize and, and create some sort of yield off of their bitcoin they held. And so what does that do? Well, you, you sell a call, who's going to buy it? A market maker. And the market maker owns a call. They're going to short some bitcoin futures against it. That's just, that's what they do. But that, that, that is a, that, that's a reality. And then of course the thing that we always guard against and or caution against is the, is the whole crypto lending thing leading, leaving your bitcoin on exchange and allowing the exchange to rehypothecate it. That is, that, that is an issue if, if you're an individual investor. So but you know, the, the reality is that gold had, has like Dave was saying, has been held in ranges for many years and most of the long term gold holders that the, the gold bugs would say the paper kind of ruined it for a while. Well, but even then, even as as much paper had been issued around gold, look at what has happened to it over the last two years. You know, especially the last year. It, when you print money, let's go to first principles. You print money, you're there, there's gonna be a, there's going to be demand for physical assets that can't be printed. It's just reality. And so just that, that's just a pure first principle. You know where I think people get confused sometimes when we talk about these things is are we talking about a trade, are we talking about long term? Well, I'm almost always talking about long term. And if I'm talking about a trade, I try to explicit, make that explicitly clear. There are trades in here. Bitcoin can be a trade here. I, I don't see extremely strong demand here. You know, at $70,000 and there this could easily trace back to the low to mid-50s off these latest moves. Especially if we have a drawdown in the market, in the general market, in the S and P and the nasdaq. If you have a draw down in the Nasdaq, this is going to move with it. It's just reality. Should it? Maybe not. But at this point that's what it, that's this the asset is, is considered risk on and it's going to move with the risk on assets or actually a little bit more violently if you look at recent history. So that's, that's one thing. It's tr. It's, it's right on its 200 week moving average here and it's holding there. But that's, you know, I would just caution against people. If you have a long term view, great, then I don't think you have anything to worry about. But if you need cash and you're plowing into these things with leverage, be very careful. That's all. So that's, that's kind of the, the way I look at it. But I agree with Dave that the, the paper bitcoin is not going to hold it down forever and it's not impactful as people are making it out to be on Twitter and whatever other social media platform, especially Twitter and YouTube.

A (17:48)

Even if it is really quickly. I mean you can look at the history of Silver and JP Morgan obviously holding down Silver because now we've seen all the threads and it must be JP Morgan that's holding down bitcoin like they did Silver. Right. But that's just a beach ball underwater. So that is just a matter of how much time it takes for it to explode and break out of that, but not whether it will or whether it won't. So I would say the paper bitcoin argument could mean a longer consolidation, but I don't think it prevents Bitcoin from going up. I mean, I think a lot of people are conflating. James, to your point, the IBIT ETF and what the mechanics are with the fact that you have massive trading of the options on IBIT specifically and those spiked during the market crash and people just read a headline and go, oh, it's paper bitcoin. It's you know, collapse.

C (18:35)

Yeah.

D (18:36)

I mean, but just, just think about again like if you have, if you have hedge funds who are, who are long bitcoin and want to hedge some of it, they, they will buy options, they'll buy some put spreads or they'll.

A (18:46)

Maybe they'll sell some calls crash they're doing it to.

D (18:50)

But even then, even then it's not, it's usually not $neutral, it's delta neutral.

A (18:55)

Yeah.

D (18:55)

Okay, so it's, it's, it's a different, it's a different amount. So what happens is if they're, if they're buying a put or they're selling a call or whatever it is and you create the other Side of that trade is a market maker who's long this. They're not going to hedge it out dollar for dollar exposure. They're going to hedge it out the delta exposure. That's not dollar for dollar. So it's, it's, it's less, it's just, it's not that it, it's not the same. And so either you have a hedge fund that says, well, I've got to reduce risk and sell some of my bitcoin or they, maybe they sell some calls or buy some puts and in order to hedge out some of their risk. And you know, it's not, it's. So either way they were going to do it. It's not that the paper is what's creating it. The paper is creating their ability to do some, some things that are, that are other than just selling straight bitcoin. That's, that's the point.

A (19:49)

And Dave, before you jump on, on this, I just want to show one more thing that I just thought was interesting. On Ibit. Bitcoin crashed 50% but BlackRock's Ibit clients barely moved with holdings down only 1% since Q4. Boomers have diamond hands. I can't say it's necessarily boomers, but it is interesting that when you look at the actual physical market for these ETFs or the spot market for these ETFs, people are just holding.

C (20:14)

So first of all, there's two bits here. The notion that paper bitcoin is suppressing the price is completely nonsense. And I want to get that. And I'm going to continue to say that simply because supply and demand people, look, investors especially in, in Twitter, always want to blame somebody else other than themselves. They always want to blame something else for happening. You know, McGlone probably gets blamed for, for things going down because he's talking about it, which is complete, right? You know, markets move up, they move down. None of us have crystal balls crashing the markets, Mike. None of us have crystal balls. The truth is, is some of us have been extremely good in our careers and long term moves. But I will tell you, I was short, massively short. The financial complex including MBMA, Fannie and Freddie in 2006. Didn't mean I was wrong, but I lost money because I, you know, I was using options and they expired, worthless. And I couldn't put them back on again because I learned about trades that Citi was doing which was so insane as to be, you know, which basically from insider trading policies, I couldn't trade because I found out about Citi, our own desks, trades. Right. Which was one of the just absolute travesty. But the fact is that you can be right and lose money if you try to time the market. If you're a really good technical trader, some of them, like Chris and some of the guys that you have on your show all the time, Scott, are very good at timing short term moves. I'm speaking about this from a long term perspective, but what I will say from a long term perspective is certain things, time does matter in markets, but in retrospect, every once in a while you can tell what actually happened. And Jeff park did a really good job explaining what actually happened in his 25 article. And what basically happened is this. There's a lot going on in the IBIT option world and there are a ton of hedge funds out there who, who had IBIT exposure and software exposure and other exposures. And if you've ever sat on a trading desk, you know this is true. With do do apologies to Joe Carlos, sir, who has never sat on a trading desk. You know that when things start to hit the fan, particularly as you approach a weekend, the risk manager might walk in and tap you on the shoulder and say, cut your positions. And when they say X amount, I.

D (22:37)

Don'T care, just do it.

C (22:39)

Yeah, we've all seen, I mean all three of us have seen this. Look, I've seen it from both the hedge fund side at 2sigma and 2sigma is a quant fund. And yet it could easily have happened. In fact did happen on at least one occasion that I know of. At John walked over and said detune the models and take some risk off the table. It does happen. It didn't happen there as much as in others. But at Citi where we covered tons of hedge funds and we talked to them, it was a common occurrence. And what will happen when that means is you get higher correlations in markets and the less liquid higher beta instruments that are in that tranche of stuff that's being sold go down further. And when you layer that on top of what was going on in the bitcoin market with fear, et cetera, et cetera, you it turned into a wave of what effectively looked like forced selling. But unlike forced selling where you literally have a gun to your head and you have to sell at price insensitive levels, you didn't get these massive wick down, back up, wick down, back up, wick down, back up. You got slow relatively and steady. Okay, I'm taking my risk off. You know, just there's no other way to explain it. It's literally the only thing that happened on before I understood what would happen. Before I read Jeff's article and actually started digging, I thought it was spot led. Well, it was, it was spot led, algorithmic led, professionally traded. It was not, oh, I'm going to smash buy the top or I'm going to smash sell the bottom. And so it was a different trading pattern than people in Bitcoin are used to. You've mentioned it many times, Scott, but effectively it's the difference between when professional investors are liquidating and when liquidation engines are liquidating. So if anyone asks the question, how can exchanges prove improve derivatives? How could they improve, you know, how could, how could they improve their risk control? The answer is, is they could use better trading methods for conducting liquidations instead of this sell at all costs and cause these massive wicks. But that's a different story for a different day. The point is decomposing. What happened last week is pretty obvious. Now having said all of that, that tells you a couple of things. It says two things happened last week that are very important. First, a crap ton of leverage got cleared. Second, a crap ton of people who wanted to be long an asset were forced to not belong the asset and they will eventually have their money back and they will go back in and become long that asset. It will happen slow and steady. It will be behind the scenes. But those are the things that bottoms are made of. Now note it's not a V bottom. Yeah, you got a little bit of an equilibrium reset. But anyone. And I said it last week, I said if you expect this to go roaring through the 70s to the 80s to the 90s, right now, I think you're wiling. I just don't think it's going to happen. Right. I think that you, but if you think that it could bounce around these levels, you know, high 60s, low 70s and creep its way back into the old trading range. Yeah, that's possible, but time is what's important. But it's important to understand what happened and I think that that's the best explanation I could give of what happened.

D (25:46)

Yeah, we, we, there's, there's probably no way for us to properly do with this macro show this morning without at least speaking a little bit about the, the possibility of, of the besent Warsh Fed Treasury Accord. You know that was a big article.

C (26:06)

Yeah, that, that is a really important topic.

D (26:08)

I think we should move, I think we should, should kind of pivot to full on macro and, and maybe maybe put A spotlight on that. I don't Mike, did you guys discuss that at all this morning? That no because he does but I.

B (26:22)

Want to bring on that full on mark. Right. I completely love that where we tilting so yeah I saw that Reddit it wasn't mentioned in the meeting. Even Ira didn't seem to care. I who knows maybe it's a trial balloon for now but I think the full on macro is that US treasury longbound at 115 is the next big trade. I think it's going to 140. I think the risk is goes in 113 and what's the benefit of Mr. If it goes up or down. So it's like a 10x time frame. I don't know. Could it be a trade? Sure. It could be a long term. Sure. Right now going into midterms Mr. Trump needs that future to go up because if it goes down it means higher inflation and number one issue is inflation. He needs crude oil to go down. That's part of the trade. So to me that's what's happening. But I want to tilt over a little bit to what Scott did this week and he posted on the macro and this is tilting over the macro. So to me the macros were overdue for that post inflation deflation. We've had the massive run up in precious metals and buying them here we all know it's not a good idea. We had the massive run up in cryptos until last year. Poof. That's a broken market. People are getting it except some of the og some people inside who don't realize it's just they're purging the bubble. It's the biggest that crypto market in terms of the macro is going to go down in history as it's going to replace tulips in my question every time I've been in trading pits. When you want to talk about market to is expensive. We're going to be saying crypto frenzy, you know 10, 20 hundred years from now. But and it would solidify me was what Scott's interview this weekend with the headline was the real battle for bitcoin and stables is getting started with Paolo or Darnio just with tether. So a key thing I want to point out is let's talk about enduring trends in the market tether. I remember 2018 digging into Mike. It's $2 billion. It's going to flip in everything and potentially right now. So I'll make the call for this year Tether's 184 billion Ethereum's 247. I think they flipping price would be around Ethereum around 1500 now. But every day goes by that price goes up a little because accumulation into stablecoins the technology is awesome. The key thing is once Trump flipped and we all realized peer to peer cash with a highly volatile digital asset that's highly speculative. When I can get the US dollar it's like didn't make sense. Poof, that's gone. And also the whole we got to understand what Trump did for the crypto market. He put in that peak full disclosure I thought I didn't think he was going to get elected and that's why I didn't think it was going to go above 100,000 after making the call. But once it did it put in the high. So that's where we are now. We're in the bear market. Don't fight it. And I think what you're doing is you're picking out weeds in the macro. The macro is this market is broken. Everybody gets it. The bubbles over everybody gets it. Yeah, we heard the narrative. You launch ETFs, poof, it dies. The only time I think to think about buying this space is number one we need. Here's one thing. First of all we need to S&P 500180 day voltage 11% to go 18% it always does. It's just question of time. It's been hanging out here much longer than I thought. But you got at least wait for that. And just the concept of a 10% correction that's complete anathema for everybody in stock market. That's what you got to wait for that be disciplined, be a good trader, sell rallies and risk assets. So so far that's worked in cryptos.

D (29:29)

Yeah.

B (29:29)

644 is a great place to cover shorts and test the trade. But 72 is the first spot. It gets back a little bit overdone again. On the upside it's just make the market prove you wrong in the bear market and they're doing nothing but proven you're right by looking to sell risk assets on rallies and all depends on that Stock market's got to go up. Once that breaks and it will we're going to first gonna thing we're gonna hear is oh, it's a healthy correction. Gotta buy the dip and that's gonna fail eventually. That's what precious metals are telling you. We've never had rallies like this. So to me this is the best trading environment ever this year and it's barely started. We're only February 9th.

C (30:02)

Yeah, I disagree with about three quarters of everything you just said, so I'm not really sure where to start. Let's start with the tulip bulb stuff. There are. If you look back at the size of the Internet bubble that I live through, it was nominally dramatically larger than what you're talking about about crypto right now. And just the crypto market is absolutely tiny relative to global stock markets and other assets. It doesn't even register at the same time. The Internet bubble had the same exact dynamic that you and I do agree on, which is there were multiple companies, pets.com being that it was a Super bowl ad being one of the most obvious, but there were tons. I mean there were literally hundreds of hundred million dollar companies back then, which by the way, $100 million in 2000 is more or less like a billion today. Not just based on the price of gold and other things, but just in terms of where market cap is in terms of relative to the market. So the, the mar. It. It was larger in scope than the crypto bubble. And yes, there are many tokens in the world of crypto that are absolutely worthless and the fact that they have hundreds of millions or billions in value is insane to me. I've been saying that for, for eight years since I got into the business, so I'm not going to defend that. But the aggregate market cap of the Internet stocks in, if you had sold it and continued to sell it other than other than 9, 11 and, and the carnage of the markets that happened after that, other than that blip, it was a great fricking trade. After the bubble had quote popped, it was a great trade. You look at Amazon, I mean, you were buying it at 50 cents, right? You know, and yeah, you know, it didn't look like it did much. It tripled in the next year after the markets cleared. And then of course, it's been legendary. It tripled to one and a half. Now it's a 200. So this is split adjusted. Obviously the trade, the prices were different back then. So you know, the notion of selling bitcoin now is like selling Amazon at 50 or 60 cents. So good luck with that. And I think it's extremely similar in terms of it now. Does that mean it's going to fly up? Look at the chart. It took forever. You know, it's a very, very slow slope. The slope didn't explode higher until 15, 16, 17 years later. Right. So do I think bitcoin's going to take 15, 16, 17 years? No, I think that Time cycles do tend to get faster these days, but you have to be patient. It's not 15, 16 hours, it's not 15 or 16 days, but it could be 15 or 16 weeks or months before you start to see price action. So understand that that is true. Now that's about the winners. I'm talking about the winners in a technology. You mentioned tether. Look, I have nothing but respect for what they're doing. But the biggest bump in stablecoins is going to come out in a competitive world and we'll see what happens. With clarity, one of two things is going to happen. Either the politicians are going to be exposed for the gutless people they are and you get nothing and the banks will, quote, win this round of the war in terms of not allowing crypto regulation because they don't want stable coins to be given out as yield, as rewards, et cetera, or they're going to cave and you're going to have a much faster financial system. In that case, you're right. Total stablecoin assets are going to flip in pretty much everything. But it's because they're going to quadruple. Right. You know, within the next, within a year or two of, of, of real, real rules that allow trading and platforms that can allow both payments and investment in the same platform, including all tokenized assets. That's the real key there. But, so, yes, you're sort of right there. Let's talk about Silver. Yeah.

A (33:43)

Macro. And we've utterly failed.

D (33:44)

So, so yeah, so let's go back. I want to go back to all.

C (33:47)

Of his trading stuff. So that's fine.

B (33:48)

But you're a lot.

D (33:49)

I want, I, I don't care about the trading stuff anymore. This morning we're not going to be able to tell you where Bitcoin's going to this morning. It's just not going to happen. So, but let, let's go to, back to what I was talking about with, with the, you know, the possible accord. I like the, the phrase you used, Mike, is maybe it's a trial balloon. And Scott, I just brought up a, a chart and this is the, this is the key to all of it right here. This is off of a Bloomberg article that, that's talking about this. And just for everybody who's listening, what am I talking about? I'm talking about the fact that Warsh, you know, not recently, but has before talked about the idea of there being a, a Fed Treasury Accord where they actually work in tandem and together to manage the whole, you know, the risk of Treasuries and the balance sheet of the Fed. So what the biggest issue we have here going forward is that we're running multi trillion dollar deficits. The treasury has to find a way to stuff channels with all that paper. Where are they going to do it and what paper are they going to choose to use to borrow with? Well we've seen that they've been borrowing with short term paper for a long, long, long time. But that means that they have this, the, a 10 trillion dollar, you know, I guess swath of debt that they've got to refinance every single year now, you know and that's only growing larger. And so that's the major issue that we're seeing here is that you've got $10 trillion of debt that's sitting on their books in, in short term Treasuries, they've got a, they've got to refinance at the time that you want. You've got an administration, everybody wants mortgage rates, rates lower and mortgage rates are keyed off of this blue line. That's the 10 year, the tenure is determining what is, you know, where all are going. So to bring it all together the treasury is trying to figure out what paper we're going to float. We can't float more of this 10 year or the 20 year or the 30 year because it's going to make these rates go higher and that's, that means, because you know, the more debt that comes into, comes into the market requires, requires a higher amount of demand and if the demand is not there then rates are going to go up. That's the issue that they're staring down right now. So what's the, what's the solution? Well, yield curve control. What's yield curve control? It's when the Fed goes out and buys the paper for them. Okay, that's one solution. The other solution is the Fed to just have a, a complete backstop to buy every single T bond that the, the treasury floats out there which is not necessary right now. I don't want to be hyperbolic but the point is that the backstop, that's what they're talking about. They're talking about the, the Fed becoming a, a, an more or less having an agreement with the treasury and not giving the markets rate heartburn. So they have their, it's, it's very clear exactly what they're doing in every single move. Now could that be good short term? Sure. Long term it just means that we're, that we're doing exactly what Japan did and we're going to head down that same road. And so maybe this is a trial balloon. Maybe that's, maybe it's why Trump picked Wash. Maybe it's, maybe it's because Wash and Beset know each other and then they can work together on this. Who knows? It's not unilateral. You don't have a chairman of the Fed who just decides everything that he wants to do is the way it's going to go. But it, it is worth pointing out that this was a big story this weekend and you know, the markets have picked up on it. And then on the back side of that, China, China came out and said you need to be selling us Treasuries. If you're Chinese, we do not want you holding long term Treasuries.

A (37:53)

Yeah, I mean that was literally the next topic. I was going to say we can, you know, we can guess about who's going to buy them but we know who's selling them. Like as you said here, this is from Bloomberg this morning, Chinese holdings of Treasuries dropped to lowest since 2008. We've long discussed the chart where it shows that they're gold, that the central bank holdings of gold have risen and crossed above central bank holdings of Treasuries. That is not a trend. It's likely to stop. When you look at China and of course as you just said, China accelerate the dollarization and get into that, China has instructed banks to begin selling and limit purchases of U.S. government bonds and concerns that U.S. debt may expose banks to sharp swings.

D (38:29)

And it could be that that's the, that's the party line. But it also could be like they see that, you know, the treasury and the Fed working together. Really that's not going to be a, that's not going to be positive for the dollar long term. It's just not going to be. So now the flip side of that, let's again be careful to not be hyperbolic. There is nothing even close to the US treasury in as far as competition for the global reserve asset. Nothing even close. Like it's in the 70 something percentile for central banks versus 11 of, of, of European debt holding. Like there's nothing even close. So this is not something that happens overnight. And I, and I, I hear bitcoiners saying that we're going to have the global reserve as it's gonna, like this is, this is, come on, like this is not going to happen overnight. Let's, let's be realistic. The only, the only thing that could happen is we have such a Catastrophic financial event that the entire financial world collapses and everything is reshuffled. That's possible. I'm not saying it's not. And that the US dollar has, has had the helm for a very long time and no currency keeps the helm forever. That's true at least in the history of the, of the modern world. But you know this is, this is, this is the important topic of, of of the treasury right now is, is how to navigate all this and with the same time that you have noise around there and is it really noise or is it actual action? You know Chinese China coming out and telling their banks to sell Treasuries. That's, that's an event. That's not nothing. That is a, that's a, that's reality.

B (40:14)

So I got a piggy on the back on that. I think that's part of the biggest macro trade of a lifetime kicking in now. And I'll show you a chart to show you two charts show you first the trade and then the macro. Not just to trade the big trend. The first thing is you just look at the compression of the US treasury bond market. This is a bond future. I started in the business in this pit. I've been wrong on it for three years. At least that's a good sign. McGlone's been dead wrong and I was long on gold for till 2024 and it's just ready to break out. So I look at this as. Yeah, I looked at. To me it was. There's certain signals I had in 1998 to buy some of these weight out of the amount of Eurodollar calls. And when long term capital went under they went great. But the first few expired worthless. This is just to me a long call trade. This is bonds and this is the Bollinger bands the narrowest in since 2008. Okay, there's a trade there. Maybe it breaks down initially and then I point out Treasuries. I mean when is state government's ever advice been good to its government? I remember being in London in 2020 or so and they, there was a rule that none of the, they couldn't invest in pension or pension funds, endowments or any cost any people in London could not invest in Bitcoin. And my colleagues said okay, that's a chance to buy but here's what they're doing. Okay, good for. Good for you China. Listen, this is just a chart the total viewers treasury price price. You go back versus gold. Total price of gold is the lowest I have. You know, I can only go back to 73 on it. It's low since 1980. This is where you look for just a little bit of crocodile doll, crocodile jaw reversion. And then I look at the stock market. The highest versus, you know, S&P 500 GDP in 100 years. Okay, a little bit of spark there. And what's a good signal? Break that lower. Just a bitcoin back to 10,000. Not a big deal. But to me, this is the biggest macro trade on the planet kicking in potentially this year. And it'll start with that long bond break. And look, and here's the key thing is what happens with Mr. Trump if that bond yield goes up and by the time we get to midterms. Oh, Mr. Trump. Inflation's higher, yields are higher, energy's higher. Good luck with that one. He's going to find a way to make that go lower.

A (42:10)

My favorite maglonism is 10k bitcoin. Not a big deal. Okay, pretty big deal.

B (42:17)

It is. But there's some things you have to do callously having been there, done that. Not a position to spaces be a response. When I see a hurricane comer coming and I don't warn people, it's my dude. Even though I know people are going to react unfavorable. I'm sorry but you have to expect that and that they all don't do that. I. After Michael Saylor spoke at that economic club meeting in December, everybody I spoke to quote was, yeah, no. And these guys are all very wealthy ex Wall street guys. They get markets and. But things he was saying now like yeah, no, that was the quote. I enjoyed it.

C (42:50)

I'll say it again. The Bitcoin 10,000 thesis is possible. It is a failure case for bitcoin, full stop. It goes to 10,000, way to zero. That's the only way it gets there. Other than maybe a stupid.

B (43:06)

How about tether Dave? Or stable coins. That's my point, that the space is going to stable coins. And away from highly specified digital assets.

C (43:15)

One is a digital representation of fiat currency of the dollar and the euro and the whatever. And the other is a financial asset based upon the network effects of its users. It's like comparing, forget apples and oranges. It's like comparing apples to steamrollers. I mean the two things are they're not the same. They're not even in the same zip code. It's a terrible analogy. I want to make one other point. You conflate macro and trading in your chart. You said it yourself. And it's, it's. I mean look, there's lies, damn lies and statistics and, and then there's charts. And that was, that was, that was such a, I don't even know the word for it. Chart criminality.

B (43:54)

To compare the price of chart crime. I love it.

C (43:57)

Yeah, it is. To compare the price of an asset in, in raw terms without taking into account that we have more than doubled the amount of dollars underneath it during that period of time is just, it's a chart crime. It just is. I mean, it's like gold, you know, like gold at 5,000. Look, I made that call when you thought gold had topped and said, okay, we're not getting there. I said, Gold at 5,000 is baked in the cake. That's the equilibrium price. And after that we'll see what happens. And what's happened after that? It went, it rocketed through, it came back down and by the way, we're still there. So it's at its equilibrium price right now, but we have 8 to 10% dollars being printed every year. You'll see 8 to 10% appreciation over the next n number of years. And so that 5,000 will reset as we continue to print. You can't ignore the denominator when you're doing things. And so Bitcoin, the issue is network effects, right? Do people believe it as value? Yes or no. That's the sole question. And as long as the market continues to churn, as long as the network effects continue to grow, it will continue to do well. And, and it will have its moment in the sun. Until then it will sit there like this. But the chart criminality is crazy. When you talk about the macro and the treasury accord, here's the issue. The issue is simple. This administration, absolutely, you nailed it. They want desperately to bring long rates down and they want to be able to do what they can to inflate away their debt. Because the more they can borrow at the long end, the more they know that the, the monetary inflation and the asset appreciation is going to allow them to get out of their debt.

D (45:36)

And believe me, it was a wake up call for the Treasury. When the Fed lowered rates by 50 basis points before the election and the 10 year went up 50 basis points. That was an oh, they're not buying our anymore. We're gonna have to actually get in there and do it ourselves. That's what the market told them. You want rates lower, you're going to have to come buy them yourself.

C (46:01)

Right? They also noticed something else and that's very important. They did that at a time when GDP growth was slowing when we had a hyper regulated regulatory administration. Right. We now have the opposite and you could say whatever the hell you want to say about, about Mr. Trump as you put it but two quarters of more than double above the previous administration's trend of GDP growth is not trivial. But here's a problem, we'll read about it in the news but it's not trivial and it's likely problem.

D (46:32)

Dave, this is, this is the issue that people are grappling with and investors are grappling with and what. That's why we've seen a rotation in the market. How do you, how do you reconcile record profits coming for Mag 7 companies at the same time they're laying off employees? How do you reconcile.

C (46:51)

It's easy. I mean how do you reconcile it? We know.

D (46:53)

No, how do you reconcile. I know what I know the reason of it is AI, but how do you reconcile all those jobs of menial task jobs of data collection, data synthesis, you know, spreadsheet analysis, all this?

C (47:06)

There's an easy. You want to know the answer? The answer is exactly why you saw the Russell 2000 outperforming. It's because the only answer is to deregulate. Deregulate and deregulate and get more shovel ready new factories, new businesses and help small businesses over big which by the way is massively unpopular with the entrenched, most of the entrenched political class. The real division in, in the Republican Party isn't the divisions. I mean yeah, the bullshit divisions are woke versus not woke and you know, support Israel, don't support Israel, this, all that crap, that's what's going on Dave.

D (47:45)

But the reality Dave is this just reinforces the K shaped economy and that's what's happening.

C (47:50)

Well but you know, but my point is the K shaped economy is what's happening and what the administration is trying to do. And I'm not saying they're going to succeed, I am not saying that I want them to succeed. It would be good for all of us if they did what they're trying to do. Their way to reconcile the K shape economy is to reintroduce small businesses in the United States as the engine of growth. That is the only way and that is exactly what they're trying to do. And the implication of that is exactly as you say. They're going to use yield curve control, they're going to continue to deregulate, they're going to try to run the economy hot. Now that's what they need to do. Whether they will succeed is a different story. But understand that if you're calling for those sorts of actions, understand what that means. That means that large companies don't have as much power as small. That means you need to enhance and allow for newer technologies to move in, into financial services. That's where the, the entire debate over clarity goes, right? It's the banks versus it's not the banks versus Coinbase, although Coinbase is probably leading the charge. It's the banks versus an army of firms that will find it easy to spin up neo banks and neo firms. Right. I mean, you know, coding is getting a lot easier with AI so it's not pure software anymore. The barriers to entry are dropping, but real businesses still need to be built. And so ask yourself, what does that mean? Well, that will mean significant increases in stablecoin. So the half of McGlone's argument is absolutely right. It will, it won't just be tethered, but it will be a lot of them. But it will be massive increases. It will also mean more money in the pockets of Americans and less money in the pockets of banks. There's about a hundred billion dollars of interest every single year.

D (49:34)

We hope that that's what comes out of this, that's successful.

C (49:37)

That's what's successful.

D (49:38)

As it stands, the banks want to be able to issue stable coins and have it illegal for them to pass on yield to the customer.

C (49:46)

That's true.

A (49:48)

Be a new technological representation of what they already do. They don't want any value capture to escape the banks. It's very simple. They see it as like improving swift to a faster rail.

B (49:58)

Correct?

C (49:58)

Right.

D (50:00)

You know, they, they, you, you give them a deposit, they re hypothecate your dollars and they don't give you any yield for it. You're sitting there, point 2.2% of yield at, at, you know, whatever it is. Chase or Citibank or Wells Fargo, they're giving you none of this yield that they're getting the 4% yield on the front end. They're giving you none of that.

C (50:22)

Or $3.80 billion, 7%.

D (50:24)

What's that?

C (50:25)

It's $180 billion a year.

D (50:28)

They're giving you none of that. And they want that to continue. That's correct. So that's their biggest fear of the stable coin coins. But when it, when it comes down to the stable coins are gonna, they're, they're gonna be. And that is where the treasury absolutely needs for this legislation to get through. So they have more pockets to stuff this paper in. And it'll be stuffed everywhere. The other thing needs to happen and we don't have time to talk about it today, but the Basel rules need to change. They need to change the leverage ratios for banks so they, that they, you know, Treasuries don't count as risk assets for them. I've talked about it, I've written about it. If you want to, you know, find out more about it, it's in my archives and in the informations. But that's something else that has to change. But every guy, like every single thing that we're talking about, guys, every single thing comes back to, and it will continue to come back to. Mike, you know this because you were in the pits for so long. It's all driven by, by debt. The whole market is driven by debt and bonds. And that's what, that's what. If there's anything that we can impart on people watching this show is please do not ignore the debt markets. Do not ignore the credit markets. I'm not saying they're blowing up. I'm saying that that's where the attention needs to be because that's driving everything and that's just reality. And it's going to continue until it doesn't.

C (51:48)

Right? The Basel rules here's going to be the grand bargain. The grand bargain is going to be to do exactly what you say at the same time as allowing for mathematical formula based haircutting of financial assets. This is a very tricky way of saying allowing Bitcoin to be used as collateral without having to take a full collateral charge.

D (52:08)

Sure.

C (52:08)

At that point, MicroStrategy's value is up 25, 30% in a blink, if not more. And the real question will be which big banks will try to buy it. And it will be the same for anyone who has the ability to build off of that. Because right now, for those who don't understand it, if you have a billion dollar bitcoin swap long and a billion dollar bitcoin swap short, you have to tie up $2 billion in capital. If bitcoin has its haircut to its normal volatility or volatility where you could handle it, maybe it goes to a billion dollars, but it's down 50%. You do a 50% haircut, be perfectly normal given its volatility. Now honestly, last week you'd say, oh well look, you got 50 in a week or two. It's like, no, not really. I mean, bitcoin's volatility is actually not that high. It'll probably be better than that. But the Fact is it's a huge unlock for what goes on in bitcoin that will get when the next time they change the Basel rules you will see that is going to be part of it because the head of the Basel committee actually indicated that that's the right way to do it. Now the right way to do it is math, not not oh let's just allow it to be freely floating. No, it's off of volatility and liquidity. But by the same token volatility and liquidity of treasuries relative to whatever benchmark is so low that effectively it could do exactly the same thing as you're saying. So they could undercover do that. There's a lot of pressure being put on to make that happen. I don't know whether they will succeed or not in the short run. I do know in the long run it will happen.

B (53:40)

So I have to rope that whole discussion into one simple little chart. Most notably, when you talk about a denominator I see Scott getting a little bored with us. I want to just point out one thing Scott. When you talk about the denominator which is look like bitcoin gold it's been my favorite indicator. Trump gets elected, goes to 40. Last year's high was high 30s. It broke below 20. It takes basically right now about 14 ounces of gold per one bitcoin. The biggest problem on the planet is this. This leading indicator of the ancient store value versus this highly speculative digital asset never bottoms with volatility. 180 day volatility on S&P5 and at the lowest in 8 years. Just look at the last time it bottom around 10 or so voltage was around 25 26%. That was now that's a laggy measure. And again let's look at the stock market in terms of gold. It's heading lower. So this is and gold's so stupid expensive. Now you can just the fact that I can say it's two times a 60 month moving average. If I look back from the future, remember those of us who had PTSD when it bumped up to 2019 and 2011 and never got above there, never sold well those say oh okay use supposed to lighten up. This is a massive trade just kicking in and bitcoin's the leading in and leading part of it. Just like it's collapsing versus gold. I don't see what's so why Detroit trade is broken. To be looking for in long term dips is silly. You sell rallies in that until proven you're wrong. But this whole concept we use for at least 10 years, five years is poof, it's gone.

C (55:10)

So there's on Wall street there's a, there's an interesting debate always are things cyclical or secular that is is this an enduring change or is this a cycle that's going to go. You are clearly saying that the gold price is cyclical and will continue to move. What James said 15 minutes ago about China and what's going on in terms of holding treasuries says that it's secular. Meaning that if the non dollar world or the people who are pushing against the dollar are moving toward gold and that is their trend and it's not just a short term head fake then that tells you that what you just. The analysis based upon that chart is flawed because.

B (55:51)

Dave, Dave, what are you missing? Gold trade was two, three years ago. It's over. You don't buy gold it through two times it's 60 month moving average. Good luck with that.

C (55:59)

One price it's not is based exactly.

B (56:03)

It is the dominator. When the denominator breaks out it says there's a problem when, when gold, you do buy it.

D (56:09)

But you do buy it Mike. If you believe that first of all you don't need the money sitting in your bank account and second of all, if you believe that long term the dollar is going to be absolutely destroyed, the value of it's going to be destroyed by versus what Yield curve control.

C (56:25)

That's you, you, you know, versus other fiat currencies.

B (56:28)

That's, that's my point.

C (56:30)

That's the issue. The issue is if sound money ultimately becomes something that that large parts of the world understand the need for. It's a secular change. And that's my point. I think gold at 5,000 is equilibrium. I actually do. I don't think there's a buy here, but I do think it's it. I don't think it's a sell either. And I think that's kind of the point. It's going to certainly move up and down, there's no doubt. But I think having reached an equilibrium price that is a very different view of the world. Yeah, my view of the world is different than yours. That is true. I think that your chart, when you look at those things you showed me multiple lines that had zero correlation each other. You may think they are correlated but they, they don't look correlated. Bitcoin gold looks like it's getting closer to a bottom than a top. That's. And effectively that's the point.

B (57:14)

But it never Bottoms with volatility this low. That's the point. People are too early.

C (57:18)

I don't understand why stock market volatility has anything to do with that. Where, where the. If you could give me the power to say give me the. I learned from fairly smart people on quantitative finance that looking at numbers on a chart will record will create overfitting. Unless there's an intuition or a rationale behind those reasons being correlated. Now if there is, that's fine. Can you explain why stock market correlations should have anything to do with bitcoin versus gold? Because if you can't explain it then I don't understand why.

B (57:49)

Because it's beta. And I will mention it again. The ancient store of Azure basically outperforms all almost everything. When stock market volatile is going up and the stock market's going down, the ancient store values already front run that it's the trade is over. That's my point is there's only one trade left and that's Treasury. It's just catching up. The rest will 1.81 in China. So I'll say it callously. 1.81% in China for that 10 year note. I think that's where we're going. I think we'll have a decent head direction there by then year and starts with one little thing. Just a modest pickup in US stock market volatility. That's my point. We're so dependent on this. I mean the stock market has basically Atlas Shrugged in most extreme measure in history. If it drops 10% everything goes down. It just we're that stretch now and that's what cryptos are telling us by collapsing. That's what parabolic gold and silver have told you. But they've already reached pretty good nadars.

C (58:42)

Yeah, well we haven't talked about silver. I will repeat what I always say is that silver I think in this we're not at equilibrium. I think we bring is much higher but that's because there's specific issues in that metal and the gold silver ratio will revert towards its historical mean which is 20 and we're still in the what in the high 40s right now I haven't checked this morning so I don't know. But there you understand why there's a historical relationship because of the rarity in the earth's crust. Right. You know, in terms of recoverability. But the point here is if you're a bitcoiner then you believe something very different than if you're not. If you're a bitcoiner you tend to Believe in two things. Sound money is going to ultimately win out and fiat debasement is going to accelerate. In which case you believe that gold is more or less at an equilibrium and moving higher and Bitcoin will catch up. If you don't believe in that, then you believe everything you just said. And by the way, that's a perfectly fine analysis. It's just understand that that's where that's the knife edge.

B (59:39)

So you just point out the key thing of my bearishness when I saw Mr. Saylor keep saying it again. You gotta believe like oh God, that's a cult, that's not an investment.

C (59:49)

Well, I mean, you know, everyone that you claim is part of the investment and not a cult are people who are looking at 70 years, not 70 years, or looking at 50 some odd years of financial history and deciding that that is what, what matters in the history and that everything before it was irrelevant. Well guess what? It wasn't. The greatest advancement in human history happened during a period of sound money. It's called the Industrial Revolution. Right. You know this notion that inflation is necessary for human progress is one of the great psyops in human history. And yet almost every single person who quote is an investment professional has been taught that's true. So if you think contrarian, understand where that is. But yes, we live in a investing world and we have to look at these things intelligently. But I'm just pointing out this is not belief or religion. This is what will ultimately win in the end. And here's the key. China's 1.8 treasury bond because they are a massive, massive surplus economy. They don't need to borrow. They do, they do to goose their own. But who buys it? They probably their own central bank.

B (60:55)

They have Scott. Dave, they're 300 debt to GDP. Their money supply is running two times the US. That's how they pumped up their economy there. That's my point.

C (61:06)

But on a real goods perspective, they're still producing more than they consume and that's where the money comes from.

B (61:11)

They're exporting that in deflation to the rest of the world. Europe's pushing back and the whole world's depending that US stock market not going down for the next post deflation after inflation period. It's just waiting to happen.

C (61:23)

I think that the key that this, that this administration looks at is saying how the hell do we get the US long bond to be more in line with China, Japan and Germany. I think that's what they're looking at. And so that is the buttons that they want to push. So do I think that they will get some of that reversion? Yeah, probably. But the question is who's buying it? And the who's buying it actually has a lot to do with macro. It has a lot to do with who might buy bitcoin, who might buy gold, who might buy Treasuries. I think that's a large part of the analysis. Anyway, we're getting.

A (61:56)

As we wrap. Just interestingly, Mike, you called for $50 silver on 12 days ago, but only what, six trading days it took for it to go to 64. You were calling 50 to me, if you get front run on your target, that's a rounding error and you're right. Right. So we went from 120 to 64. If it had gone to 58, the world would be celebrating the call. Everybody wanted $57,000 Bitcoin because it's the weekly 200 ma and the monthly 50 there. We got to 59, eight depending on the exchange. To me, that's a good call it got there. And anybody who's waiting for the exact line maybe gets front run. So I don't know what's going to happen next, but I will say that even according to like some of your calls or those that we viewed from other people, it's enough. Right? It's enough downside, certainly on silver for.

B (62:42)

You to have been short. Short's a different.

C (62:45)

Yeah. The most important silver call though is was that 126 the absolute top. And the answer is probably for 2026, but not by 2028, 29. And you talked about in terms of decades, but there's reasons for that. I mean, the fact that silver's above 80 again, which I will continue to say is the Maginot line where the CME pulled out the big guns.

B (63:10)

Understand that if you're long silver, you have to have the US Stock market going up and it's your long silver.

C (63:17)

It is certainly correlated for sure. Very much so. Because the reason for silver is going to be the next wave of battery technology, that layer on top of solar technology that's on other technologies and data center buildouts. If SpaceX is going to be the biggest company in the world in 10 years, which it might be, by the way, with data centers in space to powering AI, there's an enormous amount of silver that's going into space.

B (63:41)

If there's success, here's the top two phrases you're going to hear. One word you're going to hear in silver market next year thrifting. And when you hear President Trump, you're going to hear lame duck make the call.

C (63:52)

Well, you're going to hear lame duck because he's up against whatever. But, you know, the fact is, is we got three years, not one for the regulatory side.

A (64:01)

We've unpacked that.

C (64:02)

Expecting Senate to do anything is. I mean, I don't know. The Senate can't pass anything. I don't know why, but they're completely dysfunctional, so.

A (64:11)

Well, we obviously unpacked the important topics here, like Bad Bunny's effect on Bitcoin price. And tomorrow we'll be talking about alternate super bowl performance and its effect on Kilburn. And it's going to be a great week, guys. That was another incredible conversation. Obviously, we could do this for three hours, but it is time to wrap so that we can go host Crypto Town Hall. We will be back tomorrow with Andrew and Tillman. And there's another guest, too, and I can't remember because I need somebody to show me my calendar 15 times to remember what's on it. And that's all I got for you today. Thank you, gentlemen. We will see you next week. Bye.

B (64:47)

That's dope.