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- [00:01]
A
Bitcoin and seemingly all other markets tanked after Fed Warsh's first fomc when he refused to give any guidance dot plot and had a quite hawkish Fed board. We're going to talk about that. But much more that's happening specifically in bitcoin with Alex Miller. Let's go. Good morning, everybody. Welcome to the wonderful world of Minecraft. When my son is here in the studio running cameras and screens, this has become a tradition. So if you're wondering why we have strange bunnies, chickens and fires behind us, that is the reason. Alex, you live out in the country. You got bunnies, chickens and fires. I do.
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B
I've also got raccoons who keep killing my damn chickens. Do not like raccoons much these days.
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A
Every person I know who's owned chickens loses the chickens usually.
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B
We've lost eight at this point. So we have. We got five new ones. One of them's a rooster. So I'm. I'm learning the joy of, you know, our sunrises about quarter of five here this time of year. So get a real nice 4:45am Cock a noodle day.
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A
You did that to yourself, sir.
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B
I. I didn't know it was a rooster when I bought it. You don't know. They're little.
- [01:36]
A
That's hilarious. All right, listen, so there's a. There's a lot of stories to unpack here. I actually want to start with the one that you pointed out, because I realized I covered it pretty thoroughly yesterday on the Daily Wolf, but not here on this show. And it's kind of a big one. Crypto industry pushes back as Pritzker signs 0.2% digital asset tax. I showed you the amazing meme that we had for this. Yep, I showed. That's the governor who. I'm not saying he looks like that, but he kind of actually looks like that.
- [02:03]
B
He doesn't not look like that.
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A
That's right. You know, he's taking your money. So the proposal here basically are actually. It's a law. He signed it, so point two percent even if you send yourself some crypto from your own wallet to your own wallet. Now, to be fair, this is kind of all digital everything. So it also applies to prediction markets, it applies to digital advertising. But at the end of the day, like, if I'm sending my money from one wallet to another, seems like that shouldn't be. Yeah.
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B
So one slight clarification. It doesn't apply to self custody. Exchange wallet. Yeah, exchange wallets. Anything that's basically by a hosted service provider. But to the point, the law is so broadly written that I don't see how it doesn't like, apply to Venmo Transfers and Zelle as well, too, because it basically references back to a different, a digital asset definition in an old law that basically says like, any, any representation of money that's not like a gift card basically is a digital asset. And so it's really broadly written, probably a lot more than they intended it to be, but yeah, ridiculous.
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A
Yeah, I mean, I think the industry, obviously, they say it's the most punitive, you know, law passed for crypto. We obviously take everything as an impersonal affront and a personal attack. And I think partially it is. Well, it's more of a story of a broke state trying to tax anything they can get their hands on.
- [03:23]
B
I mean, the same, the same budget bill also introduced like a 10% tax on digital ad on programmatic digital advertising. So if you run Facebook ads as a local business, you're now going to be taxed an extra 10% on top of that too, as part of it. You know, they've only got a $60 billion budget, Scott. They need more money.
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A
Yeah. I mean, they need to find better ways to waste more money.
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B
Yeah, yeah.
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A
I think it's more specific.
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B
It was crazy. I was seeing, like, I think I was looking, I was reading another thing, you know, speaking of other like states with large budgets, California, like, my God, just like the tech receipts they've had from like the post pandemic boom and stuff is that they would have had a $60 billion shortfall without any of those and just like without some of the AI boom numbers on it. And they're just spending like it's always going to be there. So I don't really understand what the plan is long term going forward on it, but maybe, I guess it's always
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A
going to be there.
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B
Yeah, I mean, look, the one, the, the one upside potentially to something like this is it makes them want more taxes or. Sorry, it makes them want more digital asset activity so that they can tax things more from it. So maybe it causes them to,
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A
you
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B
know, pass more good crypto legislation.
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A
Never know. But yeah, it's just a nonsensical law that should not have been signed. It's amazing. It's passed every single level and gotten there. And if anyone was left in Chicago participating in the crypto industry, they're probably leaving. I'm not sure how.
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B
We got one guy there.
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A
Yeah. Who's that?
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B
Yeah.
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A
Bob.
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B
Yeah, last guy, Last guy in crypto in Chicago Auberson.
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A
I know, actually, I know some Chicago crypto people. So they're out there. Let's talk about everybody's favorite topic right now, which is the guy with great hair, Kevin Warsh. Did you watch, did you watch the FOMC or.
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B
I did not watch it live. I read through a lot of the recaps. It was interesting to me that, you know, they find, well, I guess obviously went back to like a unanimous vote to hold interest rates where they are. I think the market seems to be pricing pretty hard. We're not maybe at most getting one more cut, but their boost now, maybe that's better now that we surrendered to Iran and the Strait of Hormuz is going to be reopening and hopefully that pulls down some of the energy inflation numbers which have been through. But I think he just came out trying to make the market. Sure. He's not going to like, throw any giant wrenches or things. He's going to be a steady, continuing hand, you know, which is, I think, obviously what people want right now.
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A
Yeah, I mean, I thought that. Well, so, I mean, to be fair, he kind of, he kind of alluded to what he would be as Fed Chair for the last year before he was even nominated as Fed Chair. But he said, I mean, he didn't give a dot plot, said no more forward guidance. I'm not going to tell you what's going to happen because we're tragically awful at doing that. I'm putting together a task force and, and every person who asked him a question, he was like, I'll tell you next time.
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B
Yep. Which again is, I think in some ways what the market wants from. I think he's really trying to build credibility, which is exactly what the Fed needs because the Fed has been not super credible for the last five years.
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A
How dare you? How dare you.
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B
Well, I mean, in fairness, they have a really hard job.
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A
I keep joking that. No, I don't understand why he would want that job.
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B
Status.
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A
Because he's like, it's billions worth, billions of dollars. With his wife who's like the granddaughter of Estee Lauder, he could have just ridden into the sunset.
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B
Yeah, but status.
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A
Yeah, I guess, but man, brutal. I think that the markets jumped, obviously, and I think that that was because there's just no expectation of a cut now. Right. Even we don't believe in the dot plots. But you did have nine out of the 18 people saying they think a hike could be coming. And you have this weird thing where they kind of blamed, wow, there's something flying behind me. They had this weird thing where they were kind of blaming, you know, oil and the war and all of that for the inflation, but oil's down like already 30 bucks a barrel, like down to pre war levels when he had the meeting.
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B
Yeah, I mean, obviously, I think some of, some of that hangover effect is still going to exist past the war ending. Right. Because it's, it's already basically into inputs and, you know, increased cost that people took on. I think the other thing is let's see what happens as we get, you know, 45, 50, 55 days down the line. I mean, I, I think the odds of us having an actual full deal with Iran in 60 days is zero. I don't think that means we're going to go back to bombing in 60 days, but I think we'll do the thing that Trump does where he just like, he's like, oh, yeah, we're just going to take another 30 days and we'll do that a couple times and maybe we get something. But, you know, market's very sensitive to forward expectations.
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A
Have you seen the terms of the deal?
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B
Yeah, it's something, it's something apparently, like
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A
I have horrid tds for looking at the facts before and after and having an opinion on it. And so I've, I have. But like, we're opening the straight. That was already open. We have the same regime. People are telling me the regime's destroyed, but when I see the guy's son there, I have very.
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B
It's not the same regime now. The IRGC is in much stronger control of it.
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A
Same or, or slightly stronger regime. Oh, God, they're.
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B
I'm gonna get some, I mean, look,
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A
and like, you know, like the deal that we backed out of, which, by the way, I didn't like the Obama deal. I'm not saying that, but like, they were not enriching uranium back then and now we're giving them 300 billion when everybody was freaking out, about 2 billion in pallets of cash or whatever.
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B
Yeah. So the, the one potential upside is, let's see, we did knock out their navy and their air force pretty good and not their ballistic missiles, which were the biggest threat. But yeah, of course the biggest problem is everyone now knows that they can open the straight and, or, sorry, they can close the straight and there's nothing we can. Are willing to do to make them open it. So, yeah, I have a, I have trouble seeing how geopolitically this isn't a win from them on it. Again, part of the thing here is that half of those terms in the MoU are these like super broad open ended, like we'll figure it out later. And it's like, okay, well why would
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A
they be able to figure it out when they haven't figured it out?
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B
Right? They actually gave up all their uranium. Okay, fine, maybe that is a good thing. But I don't think they're going to do that. You know they've always said that they're not trying to make a bomb. So of course they were willing to say in the MOU that they're not trying to make a bomb.
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A
Yeah, that's why it's. Whatever. Let's talk about other. Let's talk about bitcoin, some of other nuclear bonds strategies. STRC preferred stock hits a record low below par. So it's trading at 89 bucks. Are you in the sailor or it's going to be fine sailor camp.
- [10:31]
B
I mean I've always been in the. I don't like someone holding 5% of Bitcoin and I think that is a bad thing to have like that much concentrated in it. I get why people liked it for a while because it was obviously supporting up the market pretty well on things. But I mean like he raised money to pay 13%. Like any company can raise money if you're willing to pay 13%. Most people just aren't willing to pay 13%. So unless he figures out a way to get a perpetual motion machine going back around and bitcoin back up over $120,000 or something, I don't see how, see how this works and doesn't just.
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A
I'm wondering if it's A lot of. It is a rotation to seda. You know, I kind of talked about this yesterday, but it's got a higher yield. They have no debt and they basically were able to just follow and do the good parts and avoid the bad parts. Right. And they pay a daily dividend.
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B
Yeah. There was never actually a moat around it. There was a brand moat and like a retail hype moat, but that only lasts as long as you're the retail hype. And of course like there's other things like SpaceX that people can rotate into from a retail hype perspective.
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A
Nobody cares about that. Just kidding. That's the only thing anybody cares about. We talk about it every single day on the. It's like a crypto show. But it's like, hey, what's happening with SpaceX and Elon Musk's net worth?
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B
It goes up, it goes down kind of a Thing.
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A
So what do you actually make of the market here? We've got a lot of, you know, confusion as usual. But you know, I'm kind of in the bottoming camp. We have a lot of people who think we're going to like $5,000 now that the Peter, the Peter Schiff school. We do have whales adding mass to their wallets here in this period and we know that they were selling kind of all the way down. So I guess that's definitely good. Address is holding a thousand bitcoin now control 7.17 million bitcoin. That's highest level since March. I mean March is like yesterday. How are you viewing the market at the moment?
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B
I think it probably drops again more. I, you know what's funny is I, I don't really care what the market does in the next six months. It doesn't really affect what I do because I'm not gonna, I've. I learned long ago that I do not know how to time the market. I am not an active trader.
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A
Yeah, there's no point. It's not like you're selling here.
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B
I have, what I would say is I have no reason to think that this is the bottom. Right. Like I don't buy into the argument that there is some sort of structural thing going on right now that makes you know, the 6:58 000 we had a few, you know, last week or whatever the 64 we're at now like the bottom of the market. First off, macro things can happen. Number one. But even if we just like have a completely consistent nothing, nothing ever happens situation, I think by the end of Q3 we've definitely hit the bottom, knock on wood and are and are kind of turning back around. And I think the idea that the four year cycle was dead is overstated.
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A
Yeah. I'm tending to agree with you.
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B
Yeah. So like I'm not gonna, you know, we're not going to 5,000 again, knock on wood. Unless quantum breaks it and we can't get anyone to pivot and figure out a new implementation on things. But I absolutely, I don't know. Again it's, it's the, A lot of things could happen on a lot of. It's macro dependent. I would say I would not expect it, I would not get worried if it dropped lower now. But I also wouldn't expect this to necessarily be the bottom.
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A
Yeah. And so you said it doesn't affect what you're doing. You said obviously that sort of as an investor and a trader and a bitcoin believer but how about as a builder? What are you, what are you working on?
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B
I mean, I'll admit now is kind of a really rough time to be trying to do stuff just because you can feel in the markets how tentative people are about taking positions and especially rotating and alter anything else right now. So we actually just put out the white paper for our new stacks for our new bitcoin staking product where basically you hold like, you bring in Bitcoin, you hold like 5% STX relative to that Bitcoin, and you earn a consistent 3% yield on your Bitcoin, all entirely locked in your own wallet on the L1. So you basically have zero custody risk, zero smart contract risk, zero transfer risk, like very, very safe thing for people. We'll be shipping that out towards the end of the summer, kind of the first bond like thing that's going out in September. The only, you know, but it's, it is a, it is a difficult time to get people to like, really want to move and take positions on things and be excited about it.
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A
Right.
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B
A lot of people are in a wait and see mode now. Fortunately, we're going like largely at institutions who are a lot more willing to do that kind of thing. And so we're at least still having like pretty good traction with them on it there. But you can definitely feel it. You can definitely feel, I think just across the board how much people are in a little bit of like a wait and see approach right now. And they just want to kind of, you know, they want more information, they want to do it. They want to be back in the heady days of like 2023 or late 2024 with all that excitement that was going on.
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A
Yeah, it's, it's interesting because you, in the past we would always hear, I love the bear market, it's the best time to build. But I haven't been hearing that this time.
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B
So I think the reason for that is, is that there was more optimism in the previous ones. Right. Like, we people, I think, really understood it was cyclical. And also especially the last one, I think especially after kind of the 2021, 2022 cycle, everyone felt there were a lot of scammers. Right. A lot of them got washed out. And so you were left with people who are really trying to build and do things. And there was a lot of optimism, especially for institutional coming in. And now there's kind of like, I don't think anyone necessarily has a. Feels like they have a great picture of what comes next.
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A
Yeah.
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B
On it. You Know, we got an administration that's obviously very favorable to crypto. We got a lot of institutions coming in, and we're still sitting at the point where there's like, still a lot of volatility in the industry. I think that's really hard for people when they don't have a clear picture of what comes next. Whereas again, a couple years ago it was very easy to see like, all right, Trump gets in, if this legislation gets passed, if, you know, the Bitcoin ETFs get adopted, it's really easy to see where the next steps that could drive things would come from.
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A
So interesting because it was so bad so recently, obviously, and we only had this little Goldilocks period.
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B
And it also felt like the last crash was driven by, it was very clear what it was driven by. Right. Like it was very clearly like Terra Luna. And then FTX pulled the bottom out of the market. So it's really easy to say, like, okay, hey, there are like these bad things that happened. Cut, you know, cut the affected wounds out, heal the site, and then the body can heal. But if you don't know what's wrong right now or why things are doing what they are. And then of course, the other thing is there's just a lot of other places for people to go and gamble right now.
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A
That's. Yeah. I mean that to me is the, that's the biggest story.
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B
Yeah.
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A
That even. And even the crypto traders, first of all, they got liquidated on 10. 10. Right. Like a million of them. But even the ones who stuck around then were able to trade all those other things on crypto rails. So like the degens that were trading all coins, Hyper liquid and bitcoin, once hyper liquid added all the other things that have more volatility and are a bigger narrative and we need to trade bitcoin anymore. I mean, the perps numbers so far, like on United States exchanges, which doesn't surprise me, but astoundingly low. Right. Every exchange is adding these things, but nobody's trading them. They're still trading them on hyper liquid. $9 billion open interest or whatever.
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B
Yep. I mean, and it's, it's impressive. Like actually I think that one of the neat things with Hyper liquid is like how much, how accurately was pricing, like SpaceX and some of the other stocks going into it. Now part of that's like, I think recursive in that, you know, prop shops and hedge funds were watching the trading that was going on there to figure out where they wanted to like buy in or not. On IPOs. But yeah, I mean, ironically, what you're seeing is a really good merging of like the TRADFI and the crypto ecosystems. Unfortunately, that then spreads everybody out over a bigger surface. Yeah.
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A
So do you have any, I mean, you know, Clarity, whatever. I don't think that's passing, but a lot of people view that as a potential catalyst, certainly for altcoins. I mean, is there anything on the horizon that you're looking for that you think could change things? You did say you think we bought them by the end of Q3, which that's just like, hey, you know. Right. And then we start going back up in October. Yay.
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B
I think the biggest thing is. Yeah, you just need a sentiment change on it. I don't think again, and this is ironic, as someone who like literally testified for clarity, I think it does very little in the short term for anything. I don't think it'll like either help sentiment or makes because practically right now, if you're a builder in the US you're actually in a pretty safe spot given the current administration. Right. Clarity is all about what happens in 2028 or I guess 2029 and beyond once we get a new administration in and you know, don't know what their position on crypto is going to be. But obviously no one's really worried about the SEC going after builders or anything right now. Clarity is about the future. So I don't think it really does anything in the short term for things. I think it is just kind of a general sentiment change. I mean, there's a whole interesting line of psychology you could go down of whether the overall US economy getting more optimistic would be good or bad for different types of markets, since arguably part of the success of both the stock market and crypto and certainly things like Kyle Shi and polymarket has been the overall like nihilism from Millennials and Gen Z around their financial futures and so going much heavier on speculation and betting things. So if we actually granted, I don't think we're going to fix that issue with the economy anytime soon in the US So I guess that really won't be it. But everyone still feels, I think just if you look at consumer sentiment surveys, if you do that, people just don't know what's going to happen and it's a really stressful place for people to live and they don't make good long term investments in that case, they're just chasing whatever feels hottest at the time.
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A
Yeah, I agree. Which also then if less people are thinking about hard Money and low time preference. And then bitcoin becomes less appealing anyways, by very premise. If people don't understand.
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B
Yep. Well, and also if bitcoin is going to drop 50% over the course of six or 12 months, it's really hard to argue it as hard money. I'm not saying I still think long term it provides a very interesting and useful hedge to government fiat systems. But how do you tell someone that it's a good hard money if it can drop that much in a 6 or 12 month period?
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A
Yeah, I mean. Anything else on your mind at the moment? We've been keeping these shows a bit shorter as the news cycle has been kind of muted. There's, I think a llama just went past me.
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B
Yeah, I saw the llama there too. Mainly I want to know what have you been building in Minecraft?
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A
I lock you there for a second.
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B
I want to know what you've been building in Minecraft.
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A
I don't build in Minecraft. I did not make this world, I would like to say, but my kid made like Wimbledon or something. I don't know. Like I walked in and he made a tennis stadium.
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B
I mean, pretty. I don't. Do you not like Legos? I mean, I like. He's.
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A
The kid does like, you know, Lego, like the master Legos. He's doing like four same thing. We don't let him play in survival mode. He just builds. Okay, well, no zombies coming to kill him in his sleep.
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B
I want to see you build a glorious bitcoin temple in Minecraft.
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A
I'm going to ask him and I'm going to bring it up next time.
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B
Excellent. I love to see it.
- [22:20]
A
Deal. All right, Alex, thank you so much, man. As usual, everybody give Alex a follow. That's all we got for you today. I'll be back on the Daily Wolf. Thanks, man. Right, have a good one. Let's do,
- [22:45]
B
Let's do.