← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Tests KEY $111K Support As Market Selloff Continues! Will It Hold?
00:28:58
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- [00:01]
A
Bitcoin is currently testing 111,000 support after we had massive euphoria when it got up to 117,000 recently. At the end of the day, still trading in a range but definitely showing some potential weakness here. Will this support hold? Are we about to go into a much larger correction? And of course, more importantly, what's actually happening in the news and markets that's driving all of this price action? Going to break it down today. Cause it's Thursday. We've got Yago for bitcoin and let's go.
- [00:47]
B
Let's do.
- [00:48]
A
Good morning everybody and welcome to the the show. I hope that you're all having a tremendous day as we all are. Even though we're watching bitcoin show a little weakness. We got Yago here. Good morning sir. Not in Korea for Korea blockchain week?
- [01:06]
B
No, no. Korea is a very important market. But I, I can only be in so many places.
- [01:13]
A
Korea might be the most important market. Quietly. Those guys DJing like nobody has ever d gened in the history of degening.
- [01:21]
B
I, I think it's the not so hidden secret that most of the buy pressure is Korean. It's, it's nuts. It's a completely lopsided situation.
- [01:32]
A
Yeah. You and I started a conversation actually before we turned on the camera and I said let's just save it. We were talking about minors obviously. It's been the story right now. I mean I've brought this up a million times because our friend Mike Alfred here that was banging the drum on iron at 2 bucks on this show. It's now at 45 pre market. Obviously we've seen this massive move across miners mostly because now they're being viewed as data centers that can do AI.
- [02:01]
C
Right.
- [02:02]
A
But the other we, we have this happening as well. Breaking $2 trillion search giant Google to buy stake in public Bitcoin miners Cipher mining Big tech backing bitcoin. This is huge. So that that news came out after we've actually seen this massive move on miners. But I know that you have some concerns.
- [02:21]
B
Well, I think this, the thing is you have to look beyond the headline of these, of these players being BTC miners because their BTC mining business may be in real trouble. If you look at the cost in the US of natural gas, of petroleum, of the inputs to energy, they're flat year on year flat. But the cost of electricity in the U.S. has risen over the last year. Six and a half percent.
- [02:55]
C
Right.
- [02:55]
B
In fact, it's one of the primary drivers of CPI core inflation and it drives everything else on the inflationary side. So between tariffs and energy costs, that's where your inflation is coming from. Now, why is this important? Because electricity in the US is getting more expensive. A primary driver, probably the primary driver to this is massive need for energy by the data centers, by the AI companies. They are just ridiculously hungry. And the us as opposed to China. But the US is completely losing in terms of being able to build out new infra. So really what these large corporates are doing, what Google is doing, is they're trying to buy every single electron they can get their hands on.
- [03:44]
A
Energy story completely about energy and compute, Right?
- [03:48]
B
Yeah. So there are two implications here, though. One implication is that this could force all of these bitcoin mining companies to actually transition off of bitcoin mining, which would mean that BTC mining leaves the us. This would become especially true if, and here's what I suspect is going to happen right now. Petroleum, natural gas, they are at very, very low prices. When that spikes. Given that electricity prices in the US are already rising and are expected to rise more. If you see a spike in the inputs, that's going to be massive. It's going to hurt everyone in the US who's connected to the grid, but it's particularly going to hurt miners. The second thing is, if you're buying minor stocks, what you need to be doing, if you can, is to look beyond sort of their designation as I'm a bitcoin miner. That's not good enough, really. What's important is what kind of contractual agreements do they have around the pricing of their electricity? Is it fixed for the next 10 years or does it fluctuate? Because if it fluctuates, they're going to get crushed.
- [04:53]
A
I mean, we have hash rate at all time high, right. So difficulty has only increased the cost to mine a bitcoin. Even if the inputs stay the same, it's more difficult and higher. So to your point, if the price of energy goes up, they're in big trouble. This does seem like a euphoric pump at this point. Right? I mean, you start pulling 10 x's, 20 xs, and we used to see miners trade sort of as beta to bitcoin. Right. You kind of needed a big bitcoin move to the upside to see miners move to the upside. So this is clearly very different than previous cycles.
- [05:27]
B
Yes. And not only that, you know, there was this historic move because of China basically effectively batting mining in China, of. Of mining, which 80% was done in China up until four years ago.
- [05:44]
A
But.
- [05:44]
B
China is is building out more electric producing infrastructure than all of the rest of the world combined. It is, it is, it's building the entire US sort of embedded infra every, every three or four years at current trajectory. And so I think there is a fairly decent case that mining moves back to China. And I think, you know, in the short term that's not so good. In the longer term, it's very much a question of how bitcoin is perceived. But that is a strategic threat to the us.
- [06:26]
A
I agree with that. We've seen that before. It's so funny though. When we lost China, do you remember the biggest fear in the bitcoin community was centralization of mining in China. China was going to kill the bitcoin network. And then the minute that China got eliminated, apparently the biggest threat to bitcoin was Chinese miners are all turning off at once and bitcoin is finished. It's like the most schizophrenic bipolar narratives that we always have surrounding China.
- [06:52]
B
Yeah, well, I think China is a backbox to most people, maybe even to the Chinese ccp. It's a, it's a, it's a huge and, and very different place and it's, and it's difficult to get your hands around. But unquestionably, you know, the, the, the future, like, you know, there's the argument bitcoin fixes everything. Bitcoin does not fix everything. There's, there's a whole other world out there of, of key strategic inputs, electricity, AI, industrial outputs like drones, like electric cars, batteries, basically the entire electro stack. And the reality is that China is far ahead on many of those things and many of the current US policies, as well as many of the European policies are, are, are not helping.
- [07:48]
C
Right?
- [07:48]
B
They're, they're actively moving in the wrong direction. This whole H1B thing, right? The US needs to bring in China and India, produce far more top talent than it can be produced by the US, simply because they're a 2 billion, 2 1/2 billion people and the US is 300 million people. So even if, even if, even if.
- [08:12]
A
You know, the US twice as good, we still get a third as much talent. Right?
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B
So yeah, exactly. The US would need to. Need to generate seven times more geniuses per capita in order to break even.
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C
Right?
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B
And so the fact is that the US's superpower has been this ability to import the world's best talent to attract the world's best talent. That is a critical strategic input. And to me it feels like especially a Republican administration should be thinking in terms of the grand game, right? How, how do you build up the infrastructure, the energy, the industry and the genius to be able to compete in the, in a global world where you're competing against this, this, you know, vastly larger population and power.
- [09:08]
A
I mean there's literally, there's literally no news. Just be just being honest. I'm like clicking through it. We have initial jobless claims today. A whole lot of stuff we've talked about with the ETF approvals. We know we're about to get a thousand crypto ETFs. We know we're about to get index ETFs. We beat that to death. But you kind of said so we have a more general conversation. Bitcoin doesn't fix everything. Maybe it's a good day for us to focus on the things that bitcoin still does fix and what you're fixing on bitcoin.
- [09:37]
B
Well, I mean, look, I, I think one of the really interesting things that is happening right now is we have, depending on how you Measure it, between 2 and a half million and 6 million BTC have moved into the hands of institutional or professional money managers.
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C
Right.
- [09:55]
B
And we, we discussed this a little bit last week. The, the, the result is that there is a new level of demand for the ability to utilize BTC without counterparty risk. I think it, you know, the, the, the bitcoin community right now is obsessed with what I see as an extremely trivial question, right? Nuts versus core.
- [10:19]
A
You know, I haven't saw sailors. Sailors are not, not, not her now a Nazi, as I called them last week.
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B
But yeah, I mean it's, it's really the, the question is, is Bitcoin like there's this massive, massive institutional desire right now. High net worth, high value institutional desire for assets which are counterparty risk free. You can see it in gold. Gold is through the roof and just keeps, keeps, keeps rising. The question is, is Bitcoin going to be the leader in that story? Now bitcoin has advantages over gold. It has the advantage that you can transfer it anywhere in the world instantaneously. You can't do that with gold. It has the advantage that it's easier to store than gold. You don't need like a vault underneath a mountain you can store cryptographically, but really where bitcoin potentially can shine and where if you've been seeing the announcements from sort of like the, the, the, the crypto VC sphere or talking about Seoul as the, you know, Solana is their next big bet. What they're the, the story that they're trying to tell is that, that the next big movement in the space is institutions looking for a counterparty risk free system for settlement of transactions, trades and assets. And they're right. There is massive demand now. Right now all of that demand is in Bitcoin. But the question is, can Bitcoin maintain that position if other systems are able to offer, you know, basically institutional grade defi? And so what we've been building with BOSS I think might be the most important thing going on right now, which is institutional grade.
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C
Right?
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B
Not pretend defi, not D. Right. But institutional grade defi integrated deeply with the custodians, with the institutions, which allows you to do things like utilize BTC as collateral, utilize BTC for generating yield and be able to manage risks which doesn't look like sort of degen defi. So I think, you know, we, we, we, we've, we're currently sort of our, in, in our little bubble. The big story is all of these perps platforms and, and, and the biggest battle between CZ and hype. I think that is important in the sort of micro. But the, the really big story, the, the multi trillion dollar story in crypto that is playing out now. It's not, we're not even waiting for it anymore. It's happening now is where are institutions, high net worth individuals who are no longer, no longer have faith in the US government or any other government, no longer have faith in the regulator, no longer have faith in fiat. Right there where we were five years ago, where do they want to move to? And, and, and, and, and, and Bitcoin right now is in pole position for that and potentially can take the whole prize. If institutional grade defi is also part of.
- [13:36]
A
How soon do we get there? How soon are these.
- [13:39]
B
We're already, we're already, we're already in the process. So you know, the first, the first programmable Bitcoin already exists on the bitcoin network. We have now through BOSS, over $10 million in institutional BTC that has been made programmable. We have commitments for over a billion dollars more. We're in the process of integrating with custodians. Actually today, if you go today we announced the introduction of Grail Pro, which is the operator system allowing custodians to integrate with an institutional grade system utilizing the bus network. And the bus network itself is expected to launch to the public in about two months. So we're close. It's not an overnight thing. But it's like the bitcoin price right.
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A
Now when you have institutions screaming about solana Solana, Solana, Ethereum, Ethereum, Ethereum. How do you get them to care about building on Bitcoin?
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B
Well, I don't think that's true. I think the people who are screaming Solana, Solana, Solana are, you know, Pantera.
- [14:59]
A
Are biggest holders of Solana, dare you say.
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B
Yeah, you know, it, it's. They're shilling the institutions. But if you actually look where institutional Capital is, it's 90 Bitcoin and, and, and 10 Ethereum with almost nothing in Solana or anything else.
- [15:23]
A
Yeah, that makes sense. I think that's the treasury company narrative has hijacked the institutional involvement.
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B
Even the treasury companies, like the treasury, the true treasury companies, Right. The treasury companies which are trading at a premium, that are not getting sort of insider deals, are all Bitcoin. And frankly, Meta Planet and MicroStrategy together represent 98% of all of the assets under management for the. And it's all btc. Everything, all of the. There's headlines, but headlines do not equate to money. And the money is in Bitcoin.
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A
That's true. So that's the reason that they would stay there effectively is because the biggest tvl, most secure network, all the reasons we've talked about in the past.
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C
Yeah.
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A
So what in the perfect vision will we be able to do on Bitcoin in, I don't even know a timeline to throw out. Year, five years, 10 years.
- [16:22]
B
Well, I can tell you what the primary interest is.
- [16:25]
C
Right?
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B
Like what, what do people actually want to do? People want to be able to utilize BTC as collateral. In other words, borrow against their BTC without giving their BTC to a third party.
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C
Right.
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B
So if they can create a smart program, right, Smart contract, where they can say, look, here's my btc, it's locked up as collateral. I'm borrowing your staple coins or whatever it is that I'm borrowing from you, but it stays locked in my wallet. And the only. And it only moves to you if I don't pay back the loan.
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C
Right.
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B
That is, that is super exciting. That is a multi hundred billion dollar market in and of itself. Then the next thing is, can you utilize it for provision of liquidity carry trades, arbitrage trades. So, so if you actually look at sort of what institutions want to do, they want to use BTC as collateral, that's like 50% of the story. Then the next most important thing is futures, so they can hedge and also generate yield. Right now most of that's being done in the cme, but you can see that And I would hope to see that migrate more into defi where rates are preferable and there's, and you're not dealing with, with CME securities. And then after that it's, it's options right again for hedging and generation of yield call options. The ability to, to, to have puts that, that's together a trillion dollar market and right now hardly exists outside of centralized venues.
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A
Yeah, there's going to be so many chains but and I've seen pitches for another 10, 20, 30 of them that are seemingly coming to launch and I just really feel like things are going to consolidate at the top. Like you know, I'm sure that some of these things will be purposeful, fit and they'll do well in certain buckets. But if we truly get to a point where you could do all the things you do everywhere else on Bitcoin it seems like just a no brainer and nobody's talking about it anymore. It had its moment and now they've moved on to everything else and it'll always, always come back.
- [18:37]
B
I think we are seeing that already happening as well. So I mean if you look at where the activity is, the activity is in base Solana and BSC for sort of long tail asset trading and token issuance. It's in Bitcoin for long term store of value and institutional uses and there's a new crop of sort of application specific basically apps that, that call themselves an L1 and sort of that would be the primary example of that would be hyper hype.
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C
Right.
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B
And, and we're seeing consolidation within that.
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C
Right.
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B
I don't think the game's over.
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C
Right.
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B
I think if you look at what Cardano are doing in terms of being able to build themselves up as a smart contract and defi layer for Bitcoin, huge, huge opportunity and by far the biggest opportunity is can you put BTC to work again? Sort of crypto can be broken down into sort of like highest category. More than half the market is btc. Next biggest part of the market is stable coins. And then after that you basically get everything to do with token issuance trading sort of the casino.
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C
Right.
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B
So BTC long term store value, stablecoins short term store value, that's most of the market and plugging into that, that's the biggest opportunity.
- [20:27]
A
Yeah. As far as price action here we were talking about it kind of before the show and you actually were, I won't say disillusioned but you sort of pointed out that Bitcoin really hasn't gone up that much when you consider how bad the dollar has been?
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B
Oh, I think bitcoin's been extremely disappointing. The way I think about how I want to price Bitcoin is I'm trying to price bitcoin and my cost of living.
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A
Right.
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B
And I want to see sort of Bitcoin, you know, outpace my cost of living, my own. Everyone should have their own personal sort of inflation index, their own personal cpi, because everyone experiences, has their own basket of goods.
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C
Right.
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B
But, but you can use various things as a proxy. So, you know, the bitcoin peaked at over $60,000 in 2021. Right now we're at $100,000, which feels like, you know, 110.
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C
Right.
- [21:22]
B
Which feels like it's almost doubled, but the dollar has fallen by between 50 and 20%. So when you price in euros or when you're pricing in Swiss franc or some sort of other proxy for the general sort of cost of living, what you find is that not only bitcoin, But S&P 500, NASDAQ have all underperformed what people are claiming that they've performed. Right. So yes, S&P 500 is up over the last year in dollar terms, but it's flat in euro terms. And so much of what we're seeing right now sort of like this bullishness.
- [22:09]
C
Right.
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B
Like Wall Street's doing so well. Bitcoin's doing so well is actually an illusion because it's really the dollar that is doing really poorly.
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A
I mean, it's the worst year in decades for the dollar.
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B
Yes, by far.
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A
And that's only versus a basket of other currencies, not in actual real terms for buying power. It's much worse than it looks, actually, because it's not like the euro and Swiss franc that you're talking about are doing well. The dollar's just doing against them.
- [22:39]
B
Exactly. So, so, so the, the, the 3 or 4% inflation that is being experienced in the US is also being experienced in Europe. But the. So, so the euro is losing value, but the dollar is losing value in comparison to the euro.
- [22:57]
C
Right.
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B
It's a double whammy. And so, you know, when people say their, their experience of life is that it's getting much, much, much more expensive. Y. There's inflation and there's depreciation of the currency.
- [23:13]
A
Yeah. I mean, I, I thought that our grocery prices were supposed to get cheaper if we elected a new president.
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C
What?
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B
No comment.
- [23:25]
A
We don't. I thought inflation was no longer going to be a thing. Now it's actually crazy that The Fed pivoted last week, or caught, I guess they've already pivoted, decided to stop pausing while admitting that inflation could be rising and that they haven't reached their target. I mean, it's such a big story.
- [23:43]
B
I, I, I, I think it is a big story, but I think it's an overblown story. You know, I think probably I, if I remember correctly, had Lynn Eldon on the show last week as well, and I think she probably says the same thing, which is that the Fed is becoming less and less relevant. And I think the stuff that we were talking about at the beginning is becoming more relevant, right? The malaise in the US Everything is manageable if your economy is growing. But if energy prices are going up and if the cost of industrial inputs is going up and if it's more difficult to bring employees and if you have a huge number of jobs that are open but also increased unemployment. In other words, there's a mismatch between the population of potential workers and the jobs that are on offer. A mismatch of skills. That's the big story. And that's, I think, the story that people aren't talking about. The Fed cannot magic its way in or out of this. Like the Fed's stuck in its own problem, right? Inflation is going to continue, the US debt is going to continue to rise. There's no way out of that. But when you couple that with rising energy prices and stalled industrial growth, that's how you really get stagflation. And stagflation was, was, was, you know, people ask, you know, what happened in 1971, stagflation happened in the 70s was the era of stagflation. It took 20 years for the US to just sort of work its way back and it's still not back.
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C
Right?
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B
The productivity growth, the economic growth, the ability for people to live a middle class lifestyle, those vanished in the 70s and they're not back.
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A
It's so true. That's 50 years stagflation and that's objectively where we're heading. I mean it's hard to argue against any other environment right now besides stagflation. Jobs are weak, inflation is sticky or rising and we're cutting rates.
- [25:59]
B
I don't think there's no, you know, if with the right sort of policies. If, if, if instead of tearing down sort of solar farms, you were putting them up. If, if instead of making it impossible from a regulatory perspective to build nuclear energy, you were making it easier if you introduced free trade zones like the US could introduce free trade zones in the same way that China kick started its economy with Shenzhen, Shanghai, Hong Kong.
- [26:33]
C
Right.
- [26:36]
B
These were things that actually Trump was talking about, but right now he's ranting about Tylenol and, and, and that is a distraction.
- [26:47]
A
Maybe on purpose. We're distracting from a lot of things right now in this country, it would seem. Epstein files. No, I didn't say that out loud on this crypto show. I would never. It's really nice, actually. Just turn off the news every once in a while and just have a conversation. So I appreciate that today. I know you won't be here next week. Right. You're going to be off to Singapore.
- [27:04]
C
Yep.
- [27:05]
A
I can't do it, man. I told you, I did it for three years. I'm getting too old for that trip.
- [27:13]
B
Yeah, I, I, look, you know, travel's tough, it sucks, but you get to see the world.
- [27:21]
A
You do. I can't complain about that. All right, man. Well, guys, give Yago a follow. Check out bitcoin osbos, of course, that we were discussing here. And I guess you and I will see in two Thursdays.
- [27:33]
B
Absolutely.
- [27:34]
A
All right, man. Thank you. Thank you, everybody. Bye bye.
- [27:37]
D
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- [28:15]
A
The company as well.
- [28:16]
D
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