← The Wolf Of All Streets
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- [00:02]
A
Bitcoin just shattered an ETF outflow record for 30 days. Over $6 billion exiting crypto ETFs. Meanwhile, we have the $10.68 billion Friday options expiry hitting this week. Does that matter or not? I wrote about it in my newsletter. We can talk about that. But I've got one of the best guests to talk about all things markets. Dan Gunsberg joining today. Let's go, let's. What is up everybody? Welcome to the show. I hope you're all having a wonderful Wednesday. I was literally just gonna say Thursday. That's how good I am at this. Oh, we just transformed to a lake house. It's nice. Want to come to my lake house? It's nice. It's nice. Lake house. What's up Dan? How are you?
- [01:02]
B
I'm doing well, Scott, how are you? Great to be back here with you.
- [01:05]
A
Feel like been a while. Let's first talk about I guess the main hits and then we can dive into prediction markets and of course what else happening? Mark. So Bitcoin drops towards 62,000 as chip sell off deepens for a second day. Okay, I don't find that that interesting. I guess what's notable is what's in the title, which is also from this article. Six billion in outflows. Clearly, clearly not much interest in buying at these prices in this area. And of course the $10 billion expiry coming on Friday, this is not the biggest of all time. People are talking about it like it is. I think we had a $27 billion one in December or something like that. But listen, you're an old options trader, right? So I think you can give some insight as to this. I sort of gave my shot at it basically why it's a nothing burger in my newsletter today and how we always talk about max paid and put call ratios stuff.
- [01:57]
B
I think from a trading perspective it's, you know, as you get close to x3, all the theta decays out of the market and you know, right before expiration, depending on which way the market's leaning, pending on which way the, the new max pain point people are looking to establish is, will determine which way things trade. I think from an, from a trading perspective for traders it's a, it's a great time to be trading generally getting some, some very good two way volatility. But you know, from an investor, somebody's holding options longer term, generally enough. Inverter.
- [02:35]
A
Yeah. So I, I mean I think it's actually more interesting to watch how people reposition sort of after they close. Right?
- [02:41]
B
Absolutely. That, that's, that's what, that's what I think you have to watch. It'll set a tone, understand where the news is in the cycle, what is currently digested in the market and what may be sticking out there, you know, hiding out there. That could change, you know, investors or traders opinions on where the market's going next.
- [03:04]
A
Yeah, that makes perfect sense. I mean what do you make of just this general trend of outflows from the ETFs? I think we kind of had two catalysts. People consistently watched for the bull run, which was ETF inflows. Right. Which is a bit of a problem. But and of course strategy and both of those two things are clearly massively under pressure.
- [03:22]
B
I mean it strategy. The only buyer in the market. This seems to be the, in all my circles, it's the comment everybody gives the, the egg analogy. Like I'm the only buyer of eggs. And it, that story seems to be holding. So it's going to be really interesting to see in, you know, I think everybody who is active with Bitcoin or in the digital asset space or just that far out on the risk curve, who is going to come in and start supporting it, what narratives need to be in the marketplace. I think things like even like interest rates and recent Fed speak is obviously adding, could be pouring kerosene on cell pressure as well. Interestingly enough, if you look at the Bitcoin curve, which every time on the show I talk about this, I think it's still somewhere over 5% that if you were just going to hold Bitcoin from like June expiration, which is now out to next June, the, the yield that it's paying is somewhere close to 5%. So the curve is still showing higher bitcoin price further out, which is very. Which I find interesting usually if we're in a, in a real bear market that the futures curve gets very flat or it will even, you know, go backwardated. So interesting to see that it's still there. So maybe there's, there is still long, you know, long term bullish sentiment for Bitcoin which obviously we all know how it's built and how it's programmed. But given the fact that the main narrative is there's one buyer in the market and it's MSTR is not, not the best thing for it at the moment.
- [05:07]
A
Yeah, I wonder what the June 27th is. I guess not, not much higher than here. But yeah, still I guess in Contango.
- [05:12]
B
Yeah, I think it was trading. I think it settled Yesterday, somewhere close.
- [05:17]
A
Yeah, that's right. That's what I guess. So, yeah, there's a lot of takes on what sailors should be doing here. Obviously, you know, sailor best bet maybe to halt strategies bitcoin buying spree Interestingly, this got picked up on Bloomberg basically because of cryptoquant who said you should pause bitcoin purchases, rebuild cash reserves and adopt a systematic framework for purchase timing. There's a lot of takes on what he should be doing.
- [05:43]
B
Everybody from the peanut gallery, it's really easy to do it. Other than I find it interesting, not
- [05:48]
A
really that much has changed. All that changed was sentiment. So yeah, I mean, okay, STRC is trading way below par, so that's changed, I guess. But that's just a buying machine turned off. That's not like some systemic risk, which is how a lot of people are talking about it. I guess the question is, and before strc, what he's doing now was how he was buying bitcoin. Right. He would slightly dilute microstrategy when it's at a premium and he would buy some bitcoin. He only different styles he's adding back to the cash. So I guess the big question mark is what happened when he closed that 1.3 billion convert, you know, the 20, 28 or 29. For some reason when he did that and the cash reserves went down, that's when everything seemed to change.
- [06:28]
B
Yeah, I, I, I don't really know exactly what happened, but. Or it could be a timing with, you know, kind of the, the sentiment of the rest of the market. What is, you know, I think I was reading earlier that, you know, just from overall analyst estimates which, you know, who knows how accurate those are always going to be, that they were saying something around like if bitcoin falls towards 30,000, that there might need to be another substantial share issue is just to meet obligations. So interesting to see what, you know, if this really is going to have some type of cascading effect or not.
- [07:06]
A
But I think they would have to go pretty low. But 30 is pretty low. So I can't imagine he wouldn't be sweating at 30 one way or another. Like, I don't know that he'll blow up. I don't, you know, I think they can pay their dividends, but like, you know, strategy here is sitting at a, you know, cycle low. It's down 81% from the peak. And listen, I'm not a sailor hater at all. Everybody knows that. I'm actually just kind of like, I think it's going to be fine. I always think it's going to be fine because that's the base case. I agree.
- [07:33]
B
And this feels normal for bitcoin. I mean, for all of us that have been here long enough, 80% peak to valleys, Gartner style cycle chart patterns. This is the stuff that people wait for. When Bitcoin's at 120,000, everyone's like, oh, I'm going to buy it when it gets down to, down to 60. So, sailor, so strategy going 80% peak to low. Maybe, maybe for some it's a, it's a signal. And I think, you know, in Saylor's defense, he's not, I don't think he's looking at what the next three months look like. No, he is. You know, talk to him in, in five years, seven years, 10 years.
- [08:13]
A
Kind of the biggest thing that I've said to the critics is that, you know, they're freaking out that as of two weeks ago he was doing things that were dilutive to strategy shareholders. I have that exact same Solana mug right over there. I might have just been drinking from it. I think I heard, I have the exact same one. I think I just had coffee from it right before the show.
- [08:35]
B
Maybe that's a signal.
- [08:36]
A
Yeah, that's our signal by Solana. I don't know which signal it is, but, but I find it interesting is that, you know, he had like a week when he started doing this, you know, adding to the cash reserve and buying bitcoin with it under the 1.22 premium to NAV or whatever that people were saying it's dilutive. And I'm like, yeah, but you don't judge someone's strategy on a week of dilutive behavior. And it's been when it's been non dilutive, I think on a year to date basis, it's like 40 to 15% up.
- [09:06]
B
Yeah.
- [09:06]
A
So like, you know, yes, he's doing something this week that may be a sign of stress, but that doesn't mean that like he's going to do it every week and all of a sudden everything's going to be diluted. It's just like this short term kind of analysis of every move when he's probably, as you said, playing five year chess times.
- [09:22]
B
Exactly. And I, I just think it's, it's general investor psychology to really key in when you know, obviously your positions are under extreme pressure, like a strategy position would be if anybody bought it in the last year. But to, you know, you start seeing every down move and then you analyze Everything that happens in the actual short run as opposed to seeing the forest through the trees, which is I think where sailors had is, you know, it is he, you know, it. Given that bitcoin has another cycle which you know, every single time we're in a bear, it, you know, it always proves us wrong in the long run. So he's going to end up being on the right side of this trade eventually.
- [10:15]
A
So yeah. So I want to talk prediction markets because I know that you, it really suits your style. So I assume that you're loving participating but like you know, for people don't remember, you've probably been on the show 50 times. But in the beginning days, like it was really in the very early days of Hero where you just had uptown contracts. I mean it was basically an entire gamified will bitcoin be higher or lower than based over a certain time period? Which really to some degree is, you know, the, the first iteration I would say of prediction markets. And you saw this what I mean how long was seven, eight years ago? Nine years ago?
- [10:53]
B
It was seven. Yeah, it was eight years ago now.
- [10:56]
A
Right. I mean so, so that's wild. And now obviously so we have prediction markets in every jurisdiction. Every exchange now has a plan. I don't even know if I have the story. I do. So one of those is that meta is coming in with the arena which I think is hilarious that he's so late again. It's like, you know, like a metaverse. But arena is a pretty cool name. But then I saw this today which actually kind of blows my mind. CBOE introduces CBO predicts launching first product the new prediction market suite. So like these are the guys who like you know, the 100 plus year old incumbent and they're adding, you know, well the S and P open close higher or lower than X today.
- [11:35]
B
It's. It's amazing to see. Look, just to go back on what you were saying. Yeah we, our thesis very early on when we, when we got into crypto, when I got into crypto full time leaving the traditional trading world was that there would be. Our take was a little bit different. There would be this convergence of trading with gaming. Like trading at the end of the day was, was a big game was kind of our thesis. And the best way to express that was in a more simplified way of trading which prediction markets offer. And so we came up with that up down concept. We actually pioneered it in crypto. And then if you remember there was in the very early days there were platforms like Augur in you Know that were blockchain specific. Augur was, was very early as well. And then things like I O electronic markets, you know, predict it. There were in trade, there was some great platforms that were out there very early. And then I just think it's, you know, it's just the nature of the beast. It took, it took time to finally get to the surface and it's really interesting to see. I think now the incumbent exchanges cme ice I, you know, ICE is. Are they partnered with OKX now or they just.
- [12:59]
A
They've done a bunch of announcements there.
- [13:00]
B
Yeah, yeah. And you know, I think CBO's in a position where if they don't offer it, they're not going to look very good because it is rapidly becoming just another part of the fabric of the, of the derivative market world. The big question to me still that is outstanding is obviously this debate between is it, is it a financial product or is it betting? And that is something that we always struggled with with Hero was what is it? It sits right in the middle of this kind of Venn diagram of trading with gaming or betting. And it was always very challenging to define it. And at the time, if you remember, their regulators wouldn't even look at it. They're just like, we don't even really have a category to define this. And so it's really interesting that somebody's find, you know, that selling came in and. Yeah, exactly.
- [14:01]
A
He would have said HERO is completely compliant and legal in the United States.
- [14:07]
B
Exactly.
- [14:08]
A
Yeah. But that said, don't we think that, you know, who will win this game is a sports. Sports gambling. I think there's just nuance. Right. So like I, I understand why the states are a casino, although they're trying to block all this, would look at it and be like, like we spent millions of dollars and years like fighting like a draftkings or a fanduel, like what they went through and then like literally like you just launch a sports contract. That's the exact same thing.
- [14:36]
B
Right. The CFTC comes in, says that's ours. It's understandable. And it's understandable from the states as well for exactly what you're saying. And you know, not only states, but Indian reservations, you know, anybody that, that is getting paid or tax revenue from, from sports betting. This obviously is a very sensitive subject for all them and I think it's going to be highly debated for a long time here. So it's, you know, one other quick point that I found interesting is that, you know, I been fairly active in the Igaming space also is there. The igaming space as a whole was, was very slow to pick it up as well. You know, a lot of, a lot of the big sports books and everybody, they were like, and everyone is like in a wait and see mode. I, you know that that industry tends to move very slow. If you go back and look at sports books and you know, or sorry, online casinos and things like, you're often seeing the same slot machines, the same games, the same everything. They're very slow to change because they're, you know, there's been great margins there and their, their position is why we're going to do things. So they were very slow to pick it up and then suddenly Everybody was going 150 miles an hour trying to get these to market. And this is not only onshore, this is all in the offshore world as well. So very interesting to see how heavily it's picked up. Big kudos to Kalshi and Poly Market that they stuck it out for the last few years.
- [16:06]
A
Now I was going to say the next story there and then I want to talk about how you're actually using these. But the next story there's, I think it's the convergence of kind of crypto and prediction markets as a crypto show. Right. So of course Poly Market is literally called Poly because it was built on Polygon, which by the way, if you want to know how dead altcoins are, that you could have the most popular platform basically on the planet, named after cryptocurrency. And that coin goes down to probably tell you everything you need to know. But listen, but coming in from the other side, we're now also, because of Sea Leg, we're getting swaps everywhere, right? We're getting perps, I should say perpetual swaps. So Kalsi launches perpetual swaps, which swaps, which is like the most crypto native product that we ever had and is basically a test for these on everything. I think Coinbase now said they're going to be offering them on stocks and everything.
- [16:55]
B
Yeah.
- [16:55]
A
So we have this weird convergence of all things speculation.
- [17:00]
B
I'll say this is a, this is a seriously transformative and disruptive moment for financial markets, I think. I mean, you know, swaps tokenized assets. Basically anything that's tokenized is going to be, is going to have a perp on it now. And is that healthy? I don't know the answer to that. Like, you know, more than enough people I'm sure are going to use these for speculative purposes.
- [17:27]
A
Like everyone.
- [17:29]
B
Thank you. Exactly.
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A
Okay. All of retail.
- [17:36]
B
Yeah.
- [17:36]
A
Like, yes, there might be like somebody who's like, yeah, I see these interesting things like you can hedge your personal interest in politics. Like I'm a Democrat, Republican wins, at least I get paid. Like that's not hedging.
- [17:48]
B
Right, Scott. It just, at the end of the day, it just furthers the thesis that this is all going. I am a staunch believer and I, you know, you can't paint it perfectly in the future, but this is how we started with hero back in 2018 was this is all going to merge the, the lines between speculation, trading, gambling. I understand gambling on a RNG based, you know, spin a slot machine. That is a different story to me. But there is this, there is this void, this white space in between the two segments, the two verticals that I think is going to continue to evolve. Something like perps at the end of the day is going to feed that heavily. Something like prediction markets and what you can actually speculate on in prediction markets going to feed that heavily. This line will be very blurred and will continue to blur for a long time. And I think ultimately where you're going to start seeing capital flows and from retail is going to be more and more closer to that as things evolve.
- [19:00]
A
I can't even imagine 24, 7, 365 stock market with perps on top of that and how any hedge fund or institution on the planet manages that. Millennium guys are all like, I guess we're going to hire a bunch of people to trade thin markets abroad. But I'm not showing up at work 400 hours. There's not 400 hundred hours a week. But you know, I'm not showing up at work 200 hours a week.
- [19:28]
B
Exactly.
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A
Markets like, I'm still going to go pick up my kids after what would have been market close.
- [19:34]
B
Exactly. Like you don't want to wake up, you know, 65 years old, having not left your chair for the, the last 25 years and trying to figure out what the hell happened, that your kids are now 30 and out of college and you've been sitting at your desk trading perps 24 7.
- [19:55]
A
Yeah. So like, are you using these?
- [20:00]
B
I use I perps or prediction?
- [20:03]
A
I mean, generally.
- [20:04]
B
Well, I, Yeah, well, you know, some, some speculation. But I'll tell you what I use prediction markets for the most is it's make, it's made watching golf very exciting.
- [20:18]
A
Exactly the same reason. So I've actually said this recently, so I love the World Cup. I've finally gotten back into watching sports. I passively have the World Cup. But I used to watch every sporting event ever because I just loved sports and I've given up on fandom, all that shit, I don't care. But now I can't watch a sporting event outside of seemingly the World cup without having some skin in the game because I don't care. So like, I don't even, like I didn't watch an NBA game probably for the last four years. I just don't care. I guess I could bet on them and then I would care. Yes, Fantasy football. So I'll sometimes watch a football game just because, like I want to win. Not even because there's major money on the line because I want to beat my friend.
- [20:55]
B
You realize it's not yet, you know, most of, most of betting like that, or let's call it speculating for CFTC purposes that, you know, you're, you're, you're getting a little dopamine kick. You're not, it's not, it could be $10. It doesn't have to be $10,000. And you know, at least for me, that's not.
- [21:17]
A
It gives me something to win or lose.
- [21:19]
B
It gives you something to win. It puts you on, it puts you on one side. Exactly. You know, and I actually, just from being a trader forever, I enjoy figuring out some of the, the trading strategies around prediction. Like in golf I do, you know, I've done a lot of things where like, you know, you're, you're buying like what I would call teeny options or like very low priced optionality because the delta between, you know, the number one player and number 50 player in the world is not very big and so on any week, you know, there's a lot of very cheap optionality in the market. And I saw do things like buy those and then try to trade out of them and then use that to buy cheap upside again and see like what happens on Sunday.
- [22:02]
A
So things like that, it's like bringing back your trader mentality. I think I saw on your feed once, it was like Rory was up, you know, the most he'd ever been up in 36 holes. And you're like basically shorting. That is the easiest selling. That is the easiest trade in the world.
- [22:18]
B
Yeah, because I was able early on to buy, you know, he comes out and makes in the first three holes, he's like, you know, he's 2 over and suddenly he goes hard off, hard offered and he's cheap to buy. So now I own Rory cheap. And then Rory kind of gets his sea legs under and makes A run. Now we're getting to the end of Saturday. He's trading 70. So I'm taking money off the table and then using that to buy a bunch of, to buy a bunch of horses that are, you know, a bunch of bikers in the peloton, a bunch
- [22:44]
A
of golfers that are, most people are using it, but this is how you should be using it if you want to have a really good time.
- [22:50]
B
This is, it makes it so fun and it, it, it just, it really adds a nice feature to sports at the end of the day. And look, I, I, you know, I do it so small because it, it's, for me it's just about getting the dopamine rush. I'm not going to make, ever make life changing money on it or try to for that matter. So.
- [23:05]
A
Yeah, so there's one thing since we, since you brought up golf and I know that this is something we've talked about quite a few times, I even just brought up the site golfing because this is super cool. I don't know at what level you're involved in it at this point or what you're doing. I know you were kind of consulting early and investing and everything, but yeah,
- [23:23]
B
I own some of it. With the CEO first of all, Jared Phillips, hands down one of the best CEOs and could not be a more perfect fit anyways. Yeah, but yeah, he's such an awesome dude. He's so passionate. He's running it beautifully. They're doing very, very well. You know, I think it's at 40,000
- [23:43]
A
business crypto native like there, there's a, like you can't tell that when you look at it, which I think is the beautiful part of it.
- [23:49]
B
But yes, it rides crypto rails. Correct. At the end of the day, basically it's exactly what it says. It's a golf app that you know, gives you gps. It gives, it keeps all your stats for you very complex, very, very easy to use but very complex in terms of feature set and what it automatically does for you. And then at the end of the day it pays you to play. So if, even if you're, if you don't have a membership and you can, there's a free version you can go play and it, you will earn golfing points as you play your round and when you finish that round you'll have these points and I think right now it's maybe somewhere like six or seven dollars around very small but something to get you started and you play a couple rounds of golf and suddenly you can Go into the. The store, which is effectively a pro shop, and you've earned enough points to buy a dozen balls, let's say.
- [24:40]
A
So I don't know, because I, you know, like you, this was born out of. People probably already forget because we've had so many trends in crypto, but there was the play to earn. You know, I literally got to the point where it was like poop to earn and. And sex to earn. If you remember, that's how.
- [24:54]
B
Yeah, yes, I remember that one.
- [24:57]
A
Stefan was like, I think maybe they
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B
had all of them.
- [25:00]
A
Yeah, exercise and you earn points for your steps and. Yeah, pretty straightforward. I think Caitlin, who used to work with you, launched one as well. Right? That was.
- [25:09]
B
Yeah, she was. She was. She was the head of growth for something called Moonwalk Fitness.
- [25:19]
A
It's still one of the killer apps of crypto that just kind of died, which is like, you can be incentivized in a token for doing something you already do and participating in a community.
- [25:28]
B
Yeah, that one was great. It's for. For walking. It's, you know, great concept still exists today. Yeah. But golfing has been fantastic. It's. It's been amazing to see the growth of it. The app is incredible, and, you know, it. It's continuing to grow and it's really starting to get like, its network is starting to capture velocity. And it's the, you know, I don't have the exact number, so I don't want to give them on here, but the. I know the revenue numbers are very strong and, you know, as I was saying, you could. There's a free version, but then there's memberships that, you know, once you're in, you can tear up on your memberships, and those get huge multipliers on the points that you earn. And there's people in there that are, you know, they're earning 40,000 points around because they have, like the diamond tier membership and it is making them a lot. It's, you know, the money that they would normally spend in a. In a golf shop or kind of going to the PGA Superstore. They're earning it, playing on, you know, just playing rounds of golf and then going to our. Going to the pro shop and spending it. And it's just amazing to see the flywheel work. And the team is absolutely incredible. I would highly recommend that if you are a golfer, you go try it out.
- [26:41]
A
This was an unintended pitch, guys, but it's awesome. I have the app as well. I just stopped playing golf was my problem. Right. When you guys Started. I decided that my mental health is more important than my golf game.
- [26:55]
B
Didn't we do a.
- [26:56]
A
Might have been with you at topgolf?
- [26:58]
B
Yeah, I was gonna say we did a Wolf of Wall street session at Sitting in front of topgolf in Austin, Texas.
- [27:03]
A
I think that was fun, actually, like, a long story, but my thumb went completely numb, like, the whole side of my hand. And swinging a golf club became really painful. I had kind of a pinched nerve, so I just stopped. And then coming back seemed like because I just don't have five hours ever. That gunny was like, basically a professional golfer. For those who don't have the content, you try not.
- [27:24]
B
Not quite there. But I definitely enjoyed the game. So, yeah, it's. You know, I will say that it. It is for my career. I would just. Anybody that's listening, and I think there's a trend. I think it was the Wall Street Journal article about this. It did wonders for me in the trading world. You know, being. Being a golfer and the camaraderie and the business development that happens on the golf course is second to none. So I would highly recommend anybody, whatever walk of life that you are is learn to play golf. You don't have to be great, but learn, you know, learn the etiquette. Learn how to play. Learn how to. You know, I have friends. I call it like good business golf. They know how to go out there, keep the ball moving, and it's. It's a great sport for. For. For. For business. Absolutely.
- [28:06]
A
Yeah. The good etiquette part. Does that count? Throwing my club at people and cursing and.
- [28:11]
B
No. Yeah. That does not.
- [28:13]
A
That's definitely out of throwing my opponent in a lake, maybe.
- [28:18]
B
I guess it depends on what you're playing with, right? Yeah. Yeah. No running over your opponents with golf carts or anything. Yeah, no.
- [28:24]
A
Feels. Just feels right sometimes. All right, man. Well, I think we covered it all. We nailed it right to 9:30. It's great to have you back on the show. We got to do this again very, very soon.
- [28:32]
B
Absolutely, Scott. Appreciate it, man.
- [28:34]
A
All right, man. Everybody else, I'll see you on the Daily Wolf at noon and see you tomorrow. Thanks, man. Peace.
- [28:40]
B
That's dope.