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- [00:00]
A
Good morning everybody. Welcome to Crypto Town hall every weekday here at 10:15am Eastern Standard Time on X. Very simple title today is Bitcoin in a bear market. We've had a lot of debate over the weekend, a lot of tweets going viral as to whether bitcoin has even been in a bull market at all, whether it's entered a bear market, whether it's effectively been in a bear market for months. If you go zoom back a year, we're effectively a couple thousand dollars lower than we were on this exact date a year ago. If you look at the beginning of January, we're currently trading a few thousand dollars lower in the first week of January. So effectively, at best I think you can say bitcoin's been in a sideways market. If you look at all coins, of course, maybe a half a decade of bear market, I don't know. Very hard to argue that altcoins at large, minus the zcashes, BnBs and Solana, when they've had their quick cycles have been in a bull market. Of course we had calls for Black Monday coming into today. Has not materialized as of yet, but pretty miserable weekend for bitcoin holders as OG's apparently continue to sell. So we can dive in and unpack the the market. Dave, I don't know if you saw the tweet that I just sent to you in the group. This is really interesting cb actually I can just tag it above, but I just want people's opinion on this. CBOE continuous futures for Bitcoin Ethereum to go live on December 15th. I'm old enough to remember when December 15th, 15th or 17th was when futures were launched in the first place was the dead top of the last market. Good times. And this is a perp swaps like is this bitmex coming to cboe? I don't even know if. Dave, are you there? Otherwise somebody else can. We can certainly impact this.
- [02:13]
B
Sorry, I, I grab, when I grab my mic, I hit the mute button button. Sorry, can you hear me now?
- [02:17]
A
Yeah, I can. I just. This was interesting news. Is this effectually perpetual?
- [02:22]
B
I want to make two points really quick. The reason the original futures was the dead top was because before that no one in the United States had the ability illegally to short the market at all. So it was, you know, the, the ability to short at the time at an overextended price level that you, you know, when I say overextended, I mean overextended. I mean at the top of the market when people were saying Bitcoin hit 20,000 that first time. You never had to pay more than 17,000 depending on which exchange you were. But you, you, you wanted to buy it on. It was literally that arbitrageable, it was that frothy and it's the kind of thing that was, it was, it was easy to short and it was easy money for people. So you know, that's why that was the top one could argue that unless I suppose that we were at 300,000 on December 15th. That yeah, you know, the ability to, with being able to do, you know, run the product that's a more efficient, cheaper product will help. You might, but more likely it is, it actually unleashes a new way for people who have a very hard time going long on leverage to go along on leverage because futures are very expensive right now. And what we do, what I don't know about the CBOE new product is first of all it's not going to be like Bitmex because I don't think, I think you're still going to need a futures account to trade which means you got to go through a, a futures clearing merchant, etc. Which means that the economics are going to be the same. The biggest difference in, in perpetual swaps is not just the fact that they're perpetual but that it's real time liquidation. The liquid, you understand it's not, you can't, it's a limited loss product meaning if you put 50,000 in, you can't get a call saying you need 250,000 more. You just get liquidated and that's a very big difference. The other big difference is the spreads are really tight and, and the commissions are really low and I don't know that that's going to change. So I don't think it's that big of a deal now. But it does show something in terms of where the market is going. It's going to go in that direction which is cheaper. But I don't think it impacts the price at all that answer, your answer.
- [04:58]
A
It does. It is a totally different situation. It's just eerie. You know, it's kind of the same. It was 2017 for the four year cycle people you see that and you're 21, 2025, December.
- [05:12]
C
Yeah, yeah.
- [05:13]
B
If you believe, if you believe the, the, all of the crypto kols, the vast majority of them are calling for Bitcoin below 75,000 by then, in which case you'll have had this massive fall and if that happens then it's literally in reverse then December 15th will mark the end of the fall, the beginning of the next bull market.
- [05:34]
A
Now, I know people hate hearing this, hearing this, but nothing would make me happier than Bitcoin below $75,000 in a month.
- [05:42]
B
My God, guys, I have thought about this all weekend. Hopefully you can hear me well, but I can't meditate on this. And I have come to the decision that there are more sellers than buyers.
- [05:55]
D
Of bitcoin right now.
- [05:57]
A
Dude, that must have been 48 hours of sweat lodge.
- [06:01]
B
Intense, dude. Intense. It was okay. Intense.
- [06:07]
A
The ayahuasca worn off yet? Because that. I know that was a deep, deep, deep. Yeah, I mean, but that's. We keep coming around it. This. Gary James Lavish said it on my show this morning. Matt Hogan said it on my show yesterday. I was saying it all last week. I've never. I should say I'm always surprised, no matter how many cycles I go through, how many people there are that hold this much bitcoin that are willing to sell it. We have the same argument every time. Price kind of stops. But you're talking about guys that have largely held for a decade and a half who are just unloading billions at a time. Like, billions. It's pretty. Did you. I think I saw Amateo's hand go up.
- [07:01]
C
Yeah, yeah, yeah. I'm with you, Scott. I mean, it's shocking. I mean, these guys have been holding for over a decade. They've seen 80% drawdowns. They see markups to 60, 70,000. They didn't pull the trigger. They sat on their bags. They waited for years. I mean, it's just shocking. The thing that, like, I can't get over. It's like reverse AOL season where KOLs are usually given money to go shill projects. It's like, it's almost like a grand conspiracy where all these KOLs are being paid to just bear post. I've just seen. I mean, it's just remarkable. And I'm joking, of course. I'm just being cheeky. But, yeah, the. The overwhelming prevailing negative sentiment that's just popping up on the time line, I think that itself is a signal.
- [08:09]
A
Kelly, then Sasha.
- [08:12]
E
Yeah, I. I agree with you. It feel. It's. I feel like an outlier being bullish here, but I want to qualify that. I don't mean I'm bullish. Like, I think the price is going to completely immediately bounce from here. I'm bullish on 2026. I'm kind of. It's irrelevant for me what happens in price action between now and an actual Continuing resolution where we have clarity for beyond two months. But when we look at onchain College posted a great chart this morning which is interesting. It says bitcoin short term holder supply is hitting loss levels lower than the last two bear market bottoms. So you're. So you mean to tell me that everybody on X is correct, correctly flipped bearish at the exact cycle top? I don't think that's the case. I think, I think what's going to be interesting in the near term, in the next six weeks, primarily in the next two weeks, is on the, on whatever bounce that we get because price doesn't go straight up or straight down. So on whatever bounce we get, it's gonna be very interesting to see what level that. Whether it's inter, you know, an intermediate, small, very small bounce or larger bounce where it finds resistance on the way back up, whether it's 100 or whether it's 110, whether it's 118. And what sort of, what sort of other data other than just price that everybody gets so myopically focused on what other data is lining up with that, what be it capital flow into the market, be it, be it what's going on with, you know, this, the general flow in the markets.
- [09:58]
C
It's.
- [09:58]
E
It's just bizarre to me that everybody, the majority of the. Of the market is flipped bearish here, which I don't generally see the majority of the market ever usually having the best take of what's happening. What's weird though, is as bearish as everything is, you look at the funding rates and they're still very firmly positive. So we haven't gotten that sort of capitulation moment. As sad and scary as it feels, we haven't gotten that everybody flipping bearish in, in their leverage positions yet, which is something I typically look for. And a major difference too, from the 109 to 74 and the 74 to 48, both of those, those retraces pull back into a previous range high. And so we're kind of in a weird position right now where we don't really have a range high to, to bounce on because we've already fallen through it. So it's just the, the ultimate chop chopination sort of marker right now where you got to hold on to your butt.
- [10:59]
A
I'm on team Sideways as well. Like just looking back, I. It's very hard to say that the cycle is intact when there basically was no bull market in 2025. As I said, I do understand that there's the people who look at the, you know, Reddit post and it says October 6th at the top. And that's very convincing. And this is the one month when it should top, if you believe in the four year cycle. But it's been sideways. Now, if I want to play devil's advocate, Kelly, because I am a bull. Like I said, though, I'm a bull way down from here and actually want much lower prices. I have some money coming in and I would love to buy bitcoin a lot cheaper because that's where the money's going. So I have a personal preference there. But like the 50, the weekly 50 MA has been aligned in many markets, but certainly in bitcoin. And these are limited data points, as it will tell you. That has been very key. It has never had candle closes below it in a bull market and has always happened as a bear market is starting. We very Squarely lost the 50mA around 102, 103,000 on this weekly close. And in history, once again, very limited data points. I'm not saying this is my argument, but this is a argument that I understand. We've tested the 200 MA. That's at $55,000. I don't think bitcoin's going there, but there's a lot of people who, you know, everybody has their definition of what to them is their technical signal, if they're looking at charts. And for a lot of people, the 50 MA is meaningful and it's squarely broken. Right.
- [12:39]
E
So, you know, no, I, I completely agree with you there. I think, and I've, I've said this a number of times in the last last couple weeks. I think we're in the, a tale of two divergences right now. We have major technical signals that really signal that we are in a very bearish circumstance and setting right now. Now with the market on, you know, when you look at ta, but then you look at the other data, the sort of fundamental data that. The problem with the fundamental data is there's no telling when it's actually going to, you know, percolate into the charts. But you see the, the 2K stimulus, whether it's on taxes or actually checks. You see Japan just basically preparing their $110 billion stimulus. China's approved a stimulus package. The Fed is ending QT apparently very near term. The US is also issuing about $1.9 trillion in treasury series per year. Canada is restarting quantitative easing. And it's like, okay, I'm with you, Scott. I'm like, bring it to 74. Bring it to 60s. I'm looking at all this other data and it feels like we're in the biggest gift setup of our lives. If we look at the outline of what is to come versus what what it feels like right now on a four hour chart.
- [13:59]
A
Sasha.
- [14:01]
F
So if we look at the options market what's interesting is recently it's mostly been put. People have been buying put 28 of the volume is people buying put 21% is about people buying calls, et cetera. And if you look at where the next big expiry is, there's like 11 billion worth of calls expiring on the 26th of December versus 5.7 billions on Terabit of puts. So if you look at end of year it's still mostly calls that are sitting there. So it's going to be interesting. If you look at also strike prices on those puts right now the open interest is mostly around 90k 85 90k. So I mean it's, it's going to be interesting and I think what, what's, what's really puzzling in, in the market these days is there are a lot of like counter signals and you know, on the institutional side and we just had a big conference with the Thai at called the Bridge. I mean there's so much institutional interest and it's not like a year ago right after the election people got really excited but we didn't have the legislation in place, we didn't have anything that was started starting to move yet. Now those changes are starting to happen and I'm wondering if that might occur account for some of the, you know, dumps that are happening with OGs where it's like well the culture is changing. This is not the culture I got in for time to take some, some money off the table. I wonder if that's part of the explanation. But my point is that you know that institutions building products on top of crypto is going to take time. And we're like the unlock of people being able to work on those things at those banks and asset managers is, is unprecedented.
- [16:29]
C
So.
- [16:31]
F
It'S, it's going to be interesting.
- [16:36]
A
Eric, I think you had your.
- [16:38]
E
I just wanted to jump in there real quick. It seems to me like the, the, you know, the past three cycles into where we're at right now there's been clear opportunity to trade, you know, especially with the strength of the 2017 bull run, the very clear downtrend in 2022 with the cascading failures and you know, 2013. But you know, considering where we're at today, especially at the end of the four year cycle and all, all that sort of nonsense. It feels like the silliest time to, to really try to actively trade this market when there's so much contention in, in the data, the landscape and also the, the shifting world, the context that Bitcoin sits in. It feels to me like the, the primary focus, at least for me is capital flow in my own life and how I can get exposure and if I get better prices is great. But I'm gonna, I'm gonna huddle.
- [17:43]
B
I mean I think we should go, you know, let it, let all the other people with, with hands up talk. But there are a couple things in there. Just could we please stop saying cycles like the having cycle matters anymore? You know, it's just, look, there was no season, so there was no cycle. Now you can make an argument, you can make on any argument you want to make, but please don't say that because it just isn't, it's just there, there are political cycles, there's business cycles, there's bison cycles. You know, you can ride them but you know there's, there's no, there was no cycle this time. There was no rally. There was nothing. So let's, at least that thesis is invalidated. Doesn't mean that markets are going to do anything in particular. Particular. But do we have to keep saying that? We just say years, epochs, whatever you want to call it. Anyway, sorry, but the personal.
- [18:38]
D
Hey try this cycle guys on, on.
- [18:41]
B
The border of Mexico they're beginning to see real estate prices just collapse. You know, if there's people have estimated there's 20 million people in this country illegally, if half of those get, hey, I need to move back to Mexico or wherever they came from and they're renting homes or they have some type of home ownership. This put a lot of houses on the mark. It, Even if it's 20%, 2, 3 million houses, is anybody seeing that?
- [19:24]
C
It's.
- [19:24]
B
Well, I mean there are a lot of people who are, are and, and, and I see Robert up here, so I know, you know, we're going to talk about it later today. The, the unaffordability of home ownership is a very big reason, very big that we have that, that things are in. And, and I, I, I think that it's important to understand that when I look at Bitcoin, I look at it from an adoption point of view, which means it should go up even if dollars stay constant. But we are in a rapidly, rapidly depreciating, you know, Fiat currency, you know, financialized world. And. And that is continuing. And it doesn't seem like there's any shot of it changing. Anyway, I saw Sasha's hand up and Mark's hand is up and I saw Amateo's hands up. So, Sasha, I don't know if it was you first or.
- [20:18]
G
Let me just put my comment first.
- [20:21]
A
Yeah, Eric was up.
- [20:22]
E
Okay.
- [20:23]
B
Sorry, I. I don't even.
- [20:25]
A
Waiting. Yeah, go ahead.
- [20:26]
B
Sorry, Eric.
- [20:28]
G
No problem. So we discuss also bitcoin and crypto in our finance show in the morning, but relative to all the other asset classes out there, not just crypto by itself. And there's been a capital rotation going on for a while now, cyclical capital rotation. As happens with all the macro events right now, bitcoin is right on the trend line. Right on it. 1995 is the decision point for bitcoin technical perspective. What I can add is that, yes, as Dave was mentioning, we do have massive money printing which keeps coming. Whether it'll be right now it's the treasury, soon it'll be the Fed, which will go easing again. So over the long run, the. There's no doubt it's going to continue to be long over a shorter period is where you have to decide. Where do I pick it up? For those special. For those who are not invested in bitcoin yet, you always wait for retracement to invest in any asset, not only bitcoin. When you have a nice one, that's the time to get in. So for most of the audience who are still wondering, because adoption is still a minority of the population, right. Many people are still looking at, well, should I go in or not? For the first time, the majority of people are still not owning bitcoin. So the advice to all of them is that when you have a nice checkout, that's when you get in. Back to you guys.
- [21:51]
A
I think Mark for that.
- [21:56]
H
Hey, guys. Yeah, just touch on a couple things. You know, Kelly, you're right. It's like when my wife was nursing her kids, she took care of, you know, a bunch of other women in town, this group. Yeah, I'm talking breastfeeding here, guys. We're going back to basics.
- [22:16]
A
Breastfeeding.
- [22:18]
G
And.
- [22:19]
H
And all these women, Clear as mother's milk. That's what I say. Bitcoin's upside is. So all these women would come in and my wife would say, listen, are you getting seven wet diapers a day? Your kid's okay, he's getting enough milk. So even though you can't see the process, you have to sort of step back and say at this system. That's why I like Kelly, what you said about liquidity, keeping it smooth here. There's easing coming. There's totally going to be a gap. There could be an air gap that invites liquidity.
- [22:58]
E
So.
- [23:01]
H
I would think that with bitcoin at a extended 63 NASDAQ, that we could invite a move lower with equities, but I think that that would be a compression of the relative return. So all this period means is no leverage, please, folks. And we're still getting those seven wet diapers. The system works. You know, it's tears, not diapers that are bleeding right now.
- [23:34]
A
You must have been reading crypto Twitter, because it seems like everybody has seven wet diapers. And.
- [23:44]
H
Anyway, it's good to be on here, but I've definitely been reassessing everything. And Dave, I'm going to not push back, but invite the analog to this cycle in the past, which previous cycles, which we can say because they were a cycle, created distribution from one to the other. And we've had that in this period as well, but from a different reason, and we don't really know. I love Sasha's point about maybe the OGs are just sick of orange ties on stages and are pulling out.
- [24:27]
B
I think it's much easier than that. And look, the closest analog, if you want to go back to cycles or the closest, closest period was right after Paul Tudor Jones first said so after the. The V bottom and Covid. So it was around May of that year of 20. He made the bitcoin as the fastest horse in the race and was the first one to really reverse one from the traditional financial markets to kind of talk about the debasement trade, although he didn't use those words. And he did it. Bitcoin was like between 9 and 10,000. Around 10,000. It stayed there. It, you know, plus or minus, actually more minus, minus a little bit. It didn't get back to the level that he had set it until October. So it was the beginning of May. So you have May, June, July, August, months before it did a damn thing. And during that period of time, at 10,000, there was distribution going on where the people who were buying were people who were listening to him, people who were selling were the. Were crypto folks. And that went on until it stopped. And it stopped in October, November, and it went to 10 to 12,000 to 14,000. And then in November start to accelerate. And then we all know what happened after that. We ended up at 60,000 in March. Now, am I saying that we're going to see a 4X, you know, when this thing finally, you know, stabilizes? No, but it is it. That is the closest historical, historical parallel. And it's interesting that it's literally 10 different from where we are today.
- [26:12]
C
Right.
- [26:14]
B
Even though that is a very, very similar historical parallel for a lot of reasons.
- [26:20]
H
I think you're dead on. I'm just gonna add to your point.
- [26:22]
D
Why did you say no?
- [26:24]
H
Yeah.
- [26:28]
D
Dude, like when did I see you pessimistic last time? Well, 30 minutes ago. But not on this topic, please, Dave.
- [26:42]
A
So now we're at 4x. Why so bearish?
- [26:45]
C
Why so bearish?
- [26:46]
B
It, it's not that it won't go. It couldn't go up. Look, I, I personally think Bitcoin is 90% undervalued in the long run, right? So yeah, I think it's going to. But I think that it has to stay along with. Whenever bitcoin gets too far over its skis relative to adoption, you get euphoria and a blow off top. I just, you know, to me, you know, 4-6x seems like that would be exactly that. It would actually be worse. Arguably I'd rather see a slow, steady, grinding rally, you know, a double or whatever, you know, would be about in line. But yeah, you're right. I mean you. We haven't had euphoria in the coin market in a very long time. I mean people think that, that we had euphoria because of ETFs. No, we had some pre positioning etc, we haven't had euphoria. Euphoria is when all those people who are running strategies and there are a lot of them selling options Vol. In order to create yield on their bitcoin. When those people get gamma squeezed and they realize crap, I have to buy back when we see that. And to think that that will never happen again means you expect bitcoin to die. I'm not saying it won't, but you literally, that is what you have to believe because it is inevitable that that will happen again unless bitcoin dies. So yeah, that sort of thing could happen. But that's. That euphoria I don't think extends to be that high because they will then resell options at a new level, etc.
- [28:30]
C
Etc.
- [28:30]
B
So you know, we'll see it. It's a different kind of asset class as you get more professional because it kind of constrains the volatility of the upside to some degree. Not as much as people think because they forget about Gamma squeezes. But that's why I'm hardly bearish. If anything, I, I just. When I see extreme fear and I see all the Kol saying stuff that I want, I've been bookmarking so many people so I can, I can dump on them in, in six months. It's. It's crazy because there are some people who, their reasoning makes no freaking sense, but they just. Clickbait nonsense. I'm sorry. You know, there are some that actually are pretty good and worth following, so it's not all of them, but it, it's just. It's a crazy. It's a crazy situation. You know, we're seeing capitulation and we're seeing the end zone dances by the bears, and most of them are just comical.
- [29:32]
A
We're down like 26%.
- [29:34]
C
I mean, could.
- [29:37]
A
If that gets your bearish, like, tendencies flowing and you want to call it game over, then Godspeed. But there's about 40 or 50 bull market retraces of that size that would indicate you're probably wrong. Could be right, but probably wrong. Korav, I saw you lift your mic.
- [29:59]
D
Yeah, it was all fun. I mean, today's conversation is good because it doesn't require a lot of brains for people who have, who have lived through it. One of the funniest examples I would give is During, I think 2022, DeFi was sort of thinking it was maturing. And then these tradfi guys started stepping into crypto with a co founder of crypto, and they were making option products and more sophisticated instruments. And so there were a bunch of protocols that would build closer to eigenlayer. Right. But like sort of a leverage position over eigenlayer. And the entire idea was based on the fact that Ethereum can't retrace below 40% and Bitcoin wouldn't retrace below 30%.
- [31:04]
C
Right.
- [31:05]
D
And so just, you know, while in that conversation at token 2049, I asked, of course those, those were not the days of ChatGPT. So I had to go back to one of my analysts and we said, you know, for fun's sake, can we have a, just a number figure on how many times Bitcoin and Ethereum in the last 10 years have. Have reached, you know, have been down 20, 30, 40 and 50%. And the numbers were astounding. So I saw your post today, Scott, around the retrace, and like you just said, it's 26% down. Well, of course, nobody can deny anything in the market. Nobody knows what's happening ever.
- [31:55]
E
But.
- [32:08]
D
Did I officially.
- [32:10]
B
Okay.
- [32:11]
E
I think we lost them, Gaurav.
- [32:12]
B
I think.
- [32:12]
H
Yeah, yeah.
- [32:13]
D
Can you. Can you hear me?
- [32:14]
B
Yeah, we hear you.
- [32:15]
A
Hello?
- [32:16]
D
There was a phone call. I'm sorry. This is tricky with Twitter spaces. They were better on phone, but phone keeps receiving calls. So I was just saying that, of course, nobody knows nothing about market prediction, but end of the day, just statistically speaking, and referring to Scott's post this morning, this definitely can't be, like, the most solid reason to call it bears or the beginning of market just because we are 26% down.
- [32:57]
B
I think Scott got. Got crushed again.
- [33:03]
D
Yeah, just calling me out on my disconnect. That's what you get.
- [33:07]
B
Just, just as you. As you. You talked about Twitter space is working better on phone. I'm actually using computer because I like the mic better, but whatever. I mean, look, you have a great voice to.
- [33:19]
D
To be proud of.
- [33:21]
B
Yeah, my wife says I have a face for radio. No, it's, It's. It's funny because my. As a debater in college, I. I was at Northwestern where they have radio, tv, film, and a lot of people kept asking me to move into sports broadcasting because I'm such a sports fan. So I thought about it. We'll see. Right now I'm thinking of, do I want to narrate my own book that I'm writing? And I think the answer to that is yes, but we'll talk about that later. But anyway, as far as all this stuff going on, there's been all sorts of commentary about the most important thing that feeds Bitcoin price, which is liquidity. So, Robert, you're up here. We're going to talk later, but what are your thoughts on what's actually happening right now?
- [34:10]
D
Can I just post a question before we pass the topic to experts? Sure, because that's not my topic of expertise. I think just talking about liquidity, I don't think we can deny the fact that definitely the global markets and more reasonable and larger real institutions, not the crypto retail institutions we call institutions.
- [34:45]
B
Sorry, I think we lose them again. Someone hit the. The mute by host button and it wasn't me because I'm not hosting. So not sure how that happened.
- [34:55]
D
Yeah, I don't know. And I was like, the real institutions.
- [34:59]
B
Retail institutions.
- [35:01]
D
Yeah. So they have indeed lost confidence in the markets because of an amazing precedent playing around with the market and especially the Friday crash, the Bloody Friday crash, and so many similar incidents. What do you think would be the reason? Of course, quantitative easing can be a small reason, but do you Think it'll be a big enough reason to bring like an absolute bull trend that would capitulate alt season. I want just again, requesting that topic to be included by experts as they talk about liquidity in general.
- [35:47]
B
Me personally, I don't think so. I think that there needs to be that the rotation of money away. That trend started in earnest post October 10th, and I think that trend, based on what we're looking at, looks pretty high. I do think that you're seeing capitulation bottoms in a bunch of assets that I think are of reasonable quality. And I don't want to go through all of them. Now. We can do that separately. I know you and I agree on several of those. But for new money to come in, you need something to go. You need bitcoin and Ethereum to hold in there. Right. You know, in particular Bitcoin. And I think that when you look at the October 10th, the impact on bitcoin, it was devastating inside the crypto community and a shrug of the shoulders to most of the people who bought it this year and last year. If you bought it last couple years, you understand very, very well what you're buying. You're buying something on the come. And all you have to do is understand and look at what's going on in mining and the hash rate and all sorts of other indicators. And Bitcoin, that's alive and well. But the bitcoin market is increasing and probably should increase. So I don't know is the short answer, Gaurav. I think that new money is what's necessary. And when you see Japan announcing major stimulus, but their worries about the carry trade could be imperiled because if the yen devalues more, what will that do to hedge funds? Yada yada. That's why all that stuff is interrelated. I'm curious, you know, other people might have opinions.
- [37:43]
D
Yeah, Robert wants to say something.
- [37:46]
B
Hand up on that topic.
- [37:47]
D
No, Robert was called in initially and then, I mean, I'm not the host. Just.
- [37:56]
A
Shows up and takes our jobs. I don't even know why we're here.
- [37:59]
B
Well, I mean, you know, Scott, I don't know that you are here.
- [38:03]
A
I'm not needed here. I am here now.
- [38:05]
B
I'm here briefly. Okay, well, whatever.
- [38:09]
A
Anyway, for a good time, not a long time. Yeah, go ahead, Robert.
- [38:16]
I
Yeah. So the RRP is basically empty at this point. The treasury announced back in July, I want to say late July, that they'd be rebuilding the tga, which is basically the government's checking account. The problem with that, that sounds okay, but that's removing cash, right? The RRP being the shock absorber for the, for liquidity, for excess liquidity. That shock absorber is basically gone, right? So that from 300 billion to 850 billion that the was originally announced for the TGA, that can't come from the RP or couldn't come from the RP, which at the time only had about 150 billion, had to come from bank reserves. And so what we've seen is if you go back to really the peak Bitcoin kind of double topped there, but if you go back to like August, early, early to mid August, that was when the TGA rebuild really started to take effect. When they started to, to really start to rebuild that and consequently bank reserves started to plummet and we went from like 3.4 trillion in bank reserves down to 2.8. Now the Fed has a lowest comfortable level of reserve that they don't know. There's, I don't know, a thousand, whatever, where again the Fed none of them know what the actual lowest comfortable level of reserves actually is. And what we've seen is a tightening of liquidity both in the unsecured funding market, overnight funding market, interbank market, which is fed funds. We've seen fed funds actually tick up by 5 basis points relative to the RP, the RRP award rate, which is the Fed's lower bound for controlling the cost of overnight cost of capital. We've actually seen fed funds tick 5 basis points higher relative to that low bound. And not only that, but then you know, sofr, which is kind of everyone's new favorite talking point that has been building going back to July or August. If you look at SOFR spreads. So for minus iorb, so for minus rrp, whichever one you choose, they've all been indicating the same thing on you know, medium to long term basis. If you look at like a 10 day, 15 day, 20 day moving app average for SOFR spreads, they've all been moving higher vertical, basically parabolic going back to August. And so what this is indicating is tightening liquidity both on the unsecured interbank fed funds market, which is about $80 billion per day. And then you also have a tightening of liquidity in the secured overnight financing market, which is so for that's about $3.2 trillion per day, 3.1, $3.2 trillion gets financed in this market every single day. And so, so you've had, at least in the west you've had that dynamic starting to play out. And Jerome Powell very curiously came out on 1014 last month, about a month ago and started talking about SOFR spreads and everyone was like, you know, what, what is the Fed Chairman doing talking about the repo market and SOFR spreads? This is a very, you know, know, nerdy sort of, you know, boring sort of area of the market. What, what's going on? Then the next day on 10:15 the Fed releases a report showing oops, we un. Undercounted the amount of U.S. treasury holdings from the Cayman Islands by $1.4 trillion. Was the undercount. The, the amount of the undercount. And you might be thinking the Cayman Islands. What is a seven billion dollar annual GDP country doing with that much US treasury holdings? Well, it's all the hedge funds that are headquartered in, in Cayman and they are engaged in the basis trade which is highly levered, 50 to 1 to 100 to 1 unlevered and it's financed in the repo market. And in the Fed report talking about this undercount, they actually mentioned, look, the basis trade blue has blown up many times. You know, this is a well documented phenomenon or risk, I guess you could say sec, cftc, they've all written many papers on the straight and the rest.
- [43:19]
A
Robert, sorry to, sorry to interject. Can you give like the TLDR and how it relates to Bitcoin and crypto market?
- [43:27]
I
Yes. So liquidity is tightening in the US financial system. Liquidity has been tightening. So it's really no surprise to see, look in 2019 we know this similar dynamic happened. Federal was engaged in quantitative tightening, liquidity was tightening. Eventually you had the repo rate crisis that would have blown up the financial system. I mean it was huge. And what did the Fed do? They came in and they responded with quantitative easing. They came in, they printed bank reserves out of thin air, then injected those in the, into the financial system by qe, by buying assets from the banks. It's, it's the same setup. So yeah, like liquidity is tightening in the short term, both unsecured and secured. That, that much is clear. But like the end result or the, you know, you take it it one or two steps further. Okay, well you know, if this continues to build the pressure, we know what the release valve is. It's not rate cuts by the way, it's injection of liquidity. They might not call qe but you know, it'll be a functionally the same thing as qe.
- [44:42]
B
To your question, Scott, is nothing should surprise people in terms of Bitcoin being the most sensitive to liquidity that it has fallen 20 some odd percent as this has been happening, and nothing should surprise anybody when the Fed does finally step in and realize that there's issues and they start putting liquidity, that Bitcoin will respond exactly the same way. On the upside, that's the tldr. Did I get that okay, Robert. Sorry, I just.
- [45:12]
I
Yeah, I mean, we'll dive into more.
- [45:13]
B
Detail this afternoon, but for this, this audience, I think that's what they.
- [45:17]
I
Yeah, yeah. Well, put it very, very simply. I'm going to be buying. I've been building cash for about two, three months, and I will be enthusiastic, buying, scaling, you know, adding to my position over the next, you know, couple weeks, month.
- [45:35]
B
There you go. Okay. I think we had. Was it Amateo and Mark or Mark and Scott? I. I couldn't. I'll.
- [45:43]
D
I'll.
- [45:44]
H
I'll jump in quickly because it's on Rob, but I'm going to tell if that's okay.
- [45:48]
C
Totally, dude.
- [45:50]
H
Thanks, man. Robert, great stuff there. And the, the call for the tldr, I basically got that when I did my sub stack last week going over this exact subject, and it was the least read because. Because this is so goddamn thick and obtuse. It's really hard, but it is everything. So if we can name that tune as a group on repo in three notes, we're going to win the contest. So.
- [46:20]
I
Yeah, it's super important. I understand. It's, like, really dry, but it's really credit.
- [46:26]
E
This is how.
- [46:27]
I
This is the plumbing of the US Financial system.
- [46:30]
H
Totally.
- [46:30]
G
Yep.
- [46:31]
D
We're both right. Yeah. Robert. I mean, as boring as it sounded, it was one of the most intelligent summaries, though, in elaboration given so far. Very, very valuable.
- [46:46]
I
Thank you, sir.
- [46:49]
C
Yeah.
- [46:50]
A
Kelly and Amateo. Yeah, Amateo, then Kelly.
- [46:53]
C
Yeah, sure. Robert, that was killer. And I was going to say maybe a less intelligent version of that, which is. Gaurav. You know, my, My thoughts on this situation is that there's plenty of liquidity to start to see pickup in alts, but not enough to sustain it.
- [47:13]
B
Right, right.
- [47:14]
C
There's. There's a lot of liquidity out there in the market. It's still there, but the tightening is. Is still real. So I, I agree with this sentiment where it's like, essentially there's enough liquidity to start seeing risk assets get picked up, but there's not enough risk on appetite for that to kick off. And I think we're just sort of. The stars are lining where we're in this situation where once the liquidity starts flowing in. And if stocks do correct, and especially AI stocks, that liquidity injection is going to be even more dramatic because of the AI race, because of the CapEx, because of the stock market, because of the primaries, you know, the Fed chair replacement. There's so much that's lining up this way. So I mean, I think at some point there was a great post this weekend that was like entering a four year bear market. Where do alts go from here? Hell, you know, like it's kind of a crazy situation. Do we expect the fear and greed index to stay at 5 for the next three years? I just don't think that that's a realistic outlook on where we've been and where we're going. So I think once the risk on appetite starts to increase, we'll have enough liquidity to kick that off. The liquidity injection will come in, give the big signal and that's where retail will follow and that's when we'll actually have euphoria and that's where we can actually have the conversation on how euphoric are we and how long is this going to last?
- [49:09]
E
I agree with that. I shared a chart up there in the top two. I mean just looking at Bitcoin as a driver of the risk in, in the, the broader crypto ecosystem, Bitcoin sitting, you know, we've basically gone 360 days roughly around the $100,000 level with a major deviation below when we crashed down to 74 and a major deviation above up to 120, 26 and the price essentially sitting right now kind of regionally right in the range of, of like an equilibrium of everything that's happened in the last year. And so we haven't had like this clear, you know, as some people say thing or just, oh, this is a well defined four hour trend or weekly trend because we're getting these nice runs that then consolidate and then break down and then these, these jumps that run back up. But again, 360 days sideways and this sort of geopolitical reshuffling that feels like anytime, I mean it feels to me more than anything like there's some sort of subversive coordinated effort on the back end to whether it's specifically to drive risk out of market it's and give good prices or not, it's happening. We're seeing every time the market goes well, we see Trump tweets to completely shake up any sort of risk narrative. But what we are seeing on the back end of that is a never ending sort of back end development in integration, especially in respect to stablecoins. So I do think we're going to see still some exuberance in the broader crypto market once we actually get sort of some sort of forward look projection beyond one month, two months or three where it doesn't feel like the ground's getting shaken out from under you every time there's a bid that's, that's going to be caught.
- [51:06]
D
I'll quickly add, while there's this, you know, awkward silence. Emma, I'm going to say something on, on the title of today and on the event of today, which is heartbreaking for me and for everyone, but today we are celebrating bearishness. Economics is the killer of value in altcoins. Like if we didn't had stupid tokenomics like we have today and all that unlimited supply and even if there's no unlimited supply, the majority is followed or is held by like one or two or five key players. Just call them a cabal, whether it's Solana, whether it's Ethereum these days and no matter what. So tokenomics is the ultimate killer of altcoins. And so at this point, even if it's not altcoin season on an altcoin run, I won't be surprised. I'm just sort of complimenting Dave's point on cycles, which is like there wasn't an alt cycle or an alt run and so it's not a cycle. Dave, Coin market cap tracks 6 million tokens and don't even talk about coingecko. And all of these have billions of tokens in supply, which is basically just held by a bunch of people. And a few hundred thousand people hold a small fraction of that token, not even the supply. And so that's how that bloated value is made. And the moment there's a bit of liquidity that rushes into a segment of that market, these people start to sell. Now just simply, you know, put this phenomena on the overlay of what's happening with bitcoin when there's just about a few OGs selling it at 100k that happens every day in altcoins. There would never probably be a massive alt run or alt rally that we have seen in the 18s and the 2020s of crypto. We've just about minted too many tokens with very little value.
- [53:20]
C
I mean, I wanna, Sorry, sorry Dave.
- [53:25]
B
I just want to point out my two favorite, my two favorite coins until there were basically zero. I will continue to say that, that, that the crypto market is sick and the altcoin market is problematic and that is EOS and ftt. If you can explain to me why there's why we're talking a combined. We're talking both of them are have a larger market cap than the average company that's included in the Russell 2000 index of small companies. Those that we're talking about.
- [53:59]
D
Same reason. So same reason. There was a majority of supply and I know we are digressing and digging too deep into one topic, but now that we're talking about it very quickly, eos, a majority of it was bought as a cyclic process of increasing or hyping up the value and valuations during the 365 days of ICOs. Very little people know that it was not the 303 point some billion dollars raised. It was just a big Ponzi where the older money was raised in a distribution of wallets to raise the supply or value of the upcoming supply. And that those tokens are still held and dead in dead wallets. And so they will never be sold. And so that value always will sustain itself. The rest is sold or whatever is held. I mean I never went back to my Kraken wallet where I bought like 3 1/2 million dollars worth of EOS, which is worth shit today, right? So all of those people will probably never check their wallets and hence the value sustains itself. Probably like 90% of that is theory.
- [55:12]
B
Is 500, $600 million in value is sitting in people's couch cushions and they're, and they're too rich.
- [55:20]
D
Lost in wallets. No, no, no. Lost in wallets.
- [55:23]
B
Lost in wallets maybe, but somebody owns, there's some circulating slice people still, I mean it's not a lot. I mean if you look at EOS, for example, EOS has traded a whopping $400,000 worth in the last, in the last 24 hours. But that's people who have literally spent $400,000 buying it expecting the chance.
- [55:46]
D
There is a living, there is a living foundation, there are actually 20 plus living foundations that have whatever you call it as a Treasury, but it is a lot of money. So EOS is still not dead. I mean again, I hate EOS for all the money I lost on it, but just a logical answer.
- [56:08]
B
Okay, well whatever. I mean the fact is the market caps, the scale of the market caps. I mean anyone in crypto you can't forget, and we all remember it, that BitConnect was worth over a billion dollars for over two and a half months while on the top Banner of coin market cap and crypto compare. They called it a scam.
- [56:35]
D
Sir, I would correct you. I would correct you here politely. It was not worth a billion dollars. It actually collected cash. Billion dollars plus. That's much bigger and. And different, actually.
- [56:52]
I
Yeah.
- [56:53]
D
Even worse, if. If they knew tokenomics, this would be worth a hundred billion.
- [57:01]
B
Yeah. I mean, it's just insane. But the point is, is that the newer investors, the people who are waking up to digital assets and believe in tokenization and believe in sound money. If you're Bitcoin, whatever, whatever your reasons are, are not going to buy or put money into tokens unless they understand why it could be worth more in the future. From evaluation perspective, in some. That's.
- [57:32]
D
Dave, you have a very optimistic perception of humanity. You probably don't know about this thing called NFT and meme coins.
- [57:42]
B
I'm saying that it's. It's. I know about them. I understand them. And. And look, you know, look, if you're a poker player and you spend a lot of time in casinos, you understand that there's a degeneracy inside humanity. And we understand that people buy stocks. It's true in the equity markets, too, Gaurav. People buy on momentum. Regardless, there are plenty of traders out there who, if you ask them the question, what does such and such do that they're buying, they'll say, I have no idea, but the chart's great, and the momentum is there, and I'm buying it, and that's fine. I freely understand that. What I'm saying is that the big money on the margin, the money that creates the demand, the one that fuels an alt season, needs to have a reason. And there are a lot of tokens out there that could have a reason if it was cleaned up, if their token economics made more sense.
- [58:36]
D
You're talking about the money that feeds Nvidia and Oracle and OpenAI and these companies feeding each other that money. You mean the sensible money?
- [58:49]
B
I. I wouldn't use the word sensible. I would say at least they understand the narrative of what they're buying. But a lot of it is on the. Is momentum. I mean, okay, had Scott been here.
- [58:59]
D
We would be kicked out. Yeah, yeah. I'll open it up for other speakers.
- [59:05]
B
I'm sorry, who are buying momentum. And as a result, when the momentum stops like it has there, there's no there there. Right. You know, Silver and Nvidia or whatever. Yeah, right. Hey, Rich. You've been up the whole time. You haven't said anything. I've seen some emojis anything to, anything to add to all this.
- [59:35]
J
I've got stuck on that. There's no cycle. I lost my kudos right at that point. No jokes aside. Yeah, I, I think, I think I'm very intense on trying to understand the dynamics of.
- [59:50]
B
Can you hear me? I can hear you. Yeah, sorry.
- [59:54]
J
Yeah, off season is, is an interesting term. I mean I definitely believe and agree with a lot that's been spoken about, you know, that, that the dynamics have changed drastically. I mean traditionally and you know what would happen was bitcoin dominance would top out. You know, the E BDC ratio would, would start to pivot. And you know, historically, whether you were trading in stable coins or not, the pivot point would be the fact that altcoins would start out outperform in bitcoin value. And that was the rotation that we were used to. I just, I still have some, you know, questions around how new money flows into anything below top 50 on you know, coin market cap. We're so deep in the rabbit hole that we understand these things and I understand you saying like momentum and but 10, 10, there's no liquidity. If you go look at the volumes that have been trading on anything below the top 50. I don't know if fresh money that's coming in a big liquidity injection.
- [61:11]
H
Is.
- [61:12]
J
You know, how far are they going to go look into this. And yeah, I, I don't know. I'm scratching my head here and you know, so I'm, I'm juxtaposed and I'll tell you why Said, I mean I speak to new founders and new projects on a daily basis. I've never been more excited about what the future of blockchain startups look like. I think some of the best companies that we've ever spoken to are coming into emergence that are being brought to life.
- [61:39]
B
Can I ask a simple question, Richard? So yeah, eight years ago VCs didn't want to hear about the equity in these companies. They wanted a tokens because they wanted immediate liquidity. Is that still the truth or are we now at the point where people are saying listen, we want to invest in companies that are actually doing something as opposed to tokens which can be immediately sold that may not have any path or, or, or even correlation into what the companies are doing?
- [62:10]
J
Well, most of them, when you ask a question around token, there is a token generation, generation event on the horizon, you know, and they, they're in web three for a reason. And, and by, by the nature of the fact that, you know, as an Investor you're offered either, you know, an agreement for equity which with a token warrant mostly that remains the same. And you know, so I like to believe that the new iteration of alt season, which probably needs to have it had a change of name because that, that denotes something very different to me. And I've maybe been stuck on this point in previous calls where it's always been a bitcoin. Bitcoin dominance topping out eth, BDC ratio pivoting and altcoins is basically a rotation of capital. Knowing that the big dog is pausing for a moment. What we're talking about now is that potentially bitcoin can continue to thrive, relatively speaking and that new capital will come in via stable coin, completely bypass Bitcoin and just go straight into a momentum trade in, in a. Other than bitcoin crypto. Is that right?
- [63:22]
B
I mean it's one of the reasons I don't believe in the notion of alt season unless you get a m. Massive run. Look, whenever you get a massive run, it's no different than I'll tell a story. It's, it's a nasty story, but I'll tell it anyway. So there was a, a person who played in our, in our poker game 20 years ago. He was a doctor and he was a terrible player. I mean really bad. Like, you know, he just, I can't even describe it. And my friend who ran the game called me up one day and we're just chatting because he's my childhood friend, we talked all the time back in those days in particular and he said that this particular doctor, the doctor called me up and told me he was in the Bahamas on vacation and he hit a jackpot on the slot machine or something and won like $15,000. And my, my friend's comment was why did I just feel like, like I won a five thousand dollar slot machine? And we laughed and in truth, in fact he did because that, that, that $15,000 quickly made it into the pockets of the people who knew how to play in the game. Well, I don't think that that's all that different than all season when bitcoin goes up and people make a lot of money, they cash out and they try to play in all season and it creates momentum. It's a self sustaining degeneracy and there's nothing wrong with that. There are some tokens and some projects that may be very well end up being worth a lot more. The vast majority won't. And so I don't see it as any different. I mean Gore of You. Do you disagree with that? Because I know that, that, that's me generally poking you. So if, if nobody else says anything, we're at 11:15, we're at time. You know, it's like on this show, you know, we've been here, we watch bitcoin rally from 93 something to almost actually hit 96 right when we were starting. And now we're back to 93 something again. So volatility is certainly back intraday. But it's definitely, you know, all of these buyers and dumb buyers are being met by sellers and people are piling on and you have a lot going on. As I said, this kind of fear in the market generally closer to a bottom than a top. But markets could be irrational longer than you can remain solvent. So be careful, everyone. That's what I would say. Anybody else have concluding thoughts?
- [65:51]
I
I. Yeah, leverage is not good.
- [65:55]
D
Leverage, it's not good.
- [66:00]
B
And, and I think we're seeing that, you know, the market is getting a lot of this bled out. And we'll see, you know, we'll see what happens. I mean, you know, look, we talk every day, so, you know, it's not like anyone's going to change overnight, but there's a lot of, there's a lot of panic out there and a lot of fear. And generally speaking, if you're not levered, then you sleep like a baby. If you are levered, then you're like, oh my God, am I getting liquidated when that, That's a feeling that. Well, frankly, I, I made the choice never to have that feeling again. It. I let it happen to me once. I won't say when. Thankfully, it was. It's not a huge part of my, my net worth, but it was one of those things that it just, it's so maddening, so maddening when you look and you realize what, what it would be worth if you didn't let that happen. So anyway, that's, that's all for today. Unless somebody else has something else to say, we're going to call it here and we'll see you all tomorrow morning at 10:15.
- [67:07]
C
Cheers.
- [67:07]
J
Thanks, Dave.
- [67:08]
D
Cheers. Thanks, Dave.
- [67:10]
B
Thanks. Maybe we'll.
- [67:11]
D
Thanks, Mario for always being available.
- [67:14]
B
Ghost of Mario and the ghost of Scott. Yeah, bye. It.