Dave (4:02)

Basically this chart and the conclusion you reach from it. What's funny about it is I actually think that there's a lot to be talked about in Doge vs Bank of New York. I don't think any of it has any as much. It has as much to do with bitcoin as the ski conditions in Snowmass, Colorado. There was a. For a very, very long time, the best indicator of stock market performance was which team won the super bowl. Based off of the afc. The old Original AFC or nfc. It was a perfect, almost a perfect indicator for a long time. There was a period of time where yak milk production in Tibet correlated really well with the MSCI total return. This is the first day of statistics class for all you people. What's the first thing your statistics teacher teaches you? They say there's two words, correlation and causation, and they are very, very different. And just because something is correlated now or in the past does not mean it'll be correlated in the future. And so you need to understand if there is some causation or some reason hypothetical, why they're together now in your case, to be fair, there is a correlate, there is a reason. Dogecoin is a cryptocurrency without earnings. Okay, that's where it ends. Bitcoin's investment case versus gold is the same investment case as gold versus silver when it went from 15 to 85 as a ratio. The difference is, is Bitcoin still not even in the game? And we're talking about price levels where Bitcoin is not in the game. It's less than a. It's still in the neighborhood of somewhere between, depending on how you define it, somewhere between six or seven times underval compared to gold's monetary asset. So bitcoin gold needs to be analyzed differently than Doge versus Bank of New York or any other company that you came up with. So that's point number one, point number two. And I'm not going to talk about Doge or what they're trying to build and what it's going to be. But what I will say is if you had invested based on the exact same methodology, the exact same comparison was made many times comparing Tesla to Ford or Tesla to a basket of Ford, General Motors, Chrysler, et cetera. How would you have done eight years ago if you had said, well, it's crazy that Tesla is more right when it first became more valuable than or than the rest of the auto industry, than the rest of the Big Three when it first became. What would have happened if you had shorted Tesla and bought the big Three? Ask yourself that question and then ask yourself, if you're a money manager, if you'd still be employed if you had done that strategy. The answer to it is badly and no, in all likelihood. So I'm not saying it's the same Tesla also, you know, you know, has lots, there's lots there underneath the covers. I don't know what it, you know, what its ownership of SpaceX is. I don't know There's a lot of stuff there and let other analysts talk about it. But the, the. I was about to say something that I promised in my New Year's resolution. I'm not going to say do it.

James (7:00)

Break it now, break it now.

Dave (7:03)

Just the baseline of comparing things based off of that is bad. Now last point and I agree with you on this. This is an. Agree with Mike. I think it's very, very interesting to understand that there are 2000 some odd cryptos and, and understand where they're coming from, whatever there are you talking about Pumpk fun. Yeah, you get a lot of stuff. There are a lot of stocks that people have never heard about in the OTC markets. Lots of them, you know, tens of thousands of them. And I think most of the cryptos that are out there are that they're not bitcoin wannabes. Maybe they are and maybe there are some fools who that. But that's not the same thing. I mean, James, I think you agree with this and I'd like you to go next but is there's bitcoin and there's everything else in the, in the world of crypto. And as long as you understand that, that bitcoin is a singular unique thing and everything else in crypto are either going to be memes that people are playing with like they're playing cards or tulip bulbs or whatever and maybe they'll build some sort of sustainable community or someone or, or things that are trying to create utility for others to use in a new economy. That the main feature of crypto to date has been two things. US non accredited investors can invest early and you can get immediate liquidity if you're a venture capitalist or anybody else for that matter. Those are the two things in this administration. Those two things are going to disappear not for the wrong reason, but for the right reason, the advantage will go away. At least I believe they will. I think if you're a utility coin, you will be able to be investable and I think that they're going to try to figure out a way to equalize in terms of liquidity. Now is that bad for crypto? No, it's great for it. It may mean that more, more companies will use crypto to raise funds, but it's going to have to be on the basis it's going to create changes. It's going to take time. But I just from a beginning of 2025, my overarching thesis is we are finally in a world where building utility and value is going to matter in the crypto verse. It's going to take time for it to happen. It hasn't happened yet, but that is a massive sea change. And so, yes, I think many coins that are valued at big companies that are, have tons of earnings and are doing things that have no earnings and no potential to, to the people who are owning it are going to end up looking really, really bubbly and many things are going to look really, really good. I personally think bitcoin's in the really, really good category, but that's just my, my opening salvo.

James (9:37)

So we got to go back to causation and correlation and hold up that, that drink here that you have, Dave. Yeah. I want to know the correlation. Is it correlation or causation to the, the amount of caffeine that's in those drinks and your energy?

Dave (10:00)

Well, this is a very low caffeine drink, but my energy is, it's just, it's, it's there. I mean, it's 2025, baby.

James (10:07)

So this is just correlation, not causation.

Dave (10:09)

Certify the results. All the conspiracy theorists on the Democrat side are like, oh, I guess we really are going to have Trump and now we're going to start to see what's going to happen. I mean, look, you know, I'm looking forward to it. I, I can't, I can't argue it. It just is, it's natural energy.

James (10:25)

What you said, what you said though, about bitcoin and, and the rest of the crypto universe is really important because Mike has been right and we've talked about this for so long about bitcoin being the tip of the risks spear and it having a higher beta to the overall market and a higher beta to even technology stocks. So you've got technology stocks. Bitcoin does move with them. It's highly correlated and actually moves and in front of them often, as we've seen, and we even saw it going into the end of the year and, but at a, at a higher beta to the underlying stocks. And it's the same thing with the crypto universe. The, the, any crypto that's not bitcoin moves at a high correlation to bitcoin on average. If you take them all, they move at a higher correlation to bitcoin. And that's just the reality of it. So, and we're going to continue to see that. So if bitcoin, you know, rips higher here by 50%, you're going to see those, you're going to see people make fortunes on, on coins that have no utility. It's just reality. It becomes a casino around it. And that casino is going to continue through this year. And, and if bitcoin does have a severe drawdown, most likely caused by macroeconomic issues, then because I can't see any reason for bitcoin to have a drawdown outside of that. The fundamentals of bitcoin, like Dave said, and, and all of crypto, they're, they're just too many tailwinds right now and I don't see any headwinds for them. So. But if that happens, then, yeah, you're going to see the, you're going to see things like dogecoin go down in multiples of what bitcoin does. That's just, that's just the pure reality of it.

Scott Melker (12:15)

Right. But James, if we don't get that drawdown in macro, that would cause bitcoin to go down and everything else to go down, we have quite a few tailwinds for the entire market, even beyond bitcoin. Just want to share a tweet from Brad Garlinghouse. Obviously head of ripple 2025 is here in the Trump bull market is real for Ripple. This is even more personal after Gensler's SEC, blah, blah, blah, blah. But here's what he said. 75% of Ripple's open rolls are now US based. Well, over the last four years, the vast majority of hires were outside the US and we signed more US deals in the last six months of 24 since the election than the previous six months, excuse me, last six weeks. So listen, if you're a company in crypto that is not bitcoin based per se, there's a lot of very clear evidence that things are thawing and that the situation is improving. Massive.

James (13:01)

No now. And look, we're, you know, we're gearing up to have another, a fundraiser of my hedge fund. And well, I'll tell you how it goes in the next few months with operation choke point 2.0, because it was brutal the first time around, you know, with, with wires getting canceled, getting sent back, refused to be sent. People had to leave their banks just to, you know, invest. It was pretty wild. So we'll see. I have, I have high confidence that, that that's going to be, it's getting resolved. You know, we already have people like, you know, John Deaton said that he's, he's putting together a commission to go look into this. And so that, that's, that's an important step and that's, that is a really big step in the world of bitcoin. In particular and then all of the cryptocurrencies around it. Yeah, you cannot innovate. If you can't. If, if they shut off every single traditional banking rail, you can't get the capital there to innovate.

Scott Melker (13:56)

It just doesn't get to it.

Dave (13:57)

I mean this story is, is, is enormous. I mean I would phrase it this way. Watergate was a third rate break in about campaign financing and a cover up and it took down a presidency at best misdemeanor breaking and entering. This is unconstitutional government power, violation of the fifth amendment in due process without any question, depriving potentially hundreds of thousands of people of their jobs all because there was a bias that probably came from the top and it needs to be stated and these unredacted. And what we're talking about people, is there is Coinbase finally managed to get through a freedom of information request that has now conclusively proven or shows pretty conclusively that it was that there is intent and action to, from the federal regulators to pressure private industries, banks into not offering services for crypto and not servicing companies that provide a crypto, Bitcoin only as well. And this is very big because what it essentially is saying is the federal government is literally depriving the livelihood of, as I said, hundreds of thousands of people, certainly tens of thousands of people and probably hundreds of thousands of people, people of their livelihood and with no reason other than the bias of Elizabeth Warren's anti crypto army. Now, whether or not we're going to get anyone from the FDIC to turn on her and say yes, she told us we had to do this as a condition of our employment. Whether she used the power of her office to do so, we do not know that. It may very well be she said it, but people could say, well okay, so maybe she said it, but it wasn't her fault. But regardless of who at the highest level said it, there is very little question looking at this, that the federal government was making a active decision to take away the livelihood of thousands and thousands of Americans from being able to play in the crypto world or trade in the crypto world or build funds in the crypto world or build payment rails in the crypto world. That is a very big deal. So I believe this story will have legs.

James (16:18)

You know, let's move up a little bit in, in, you know, 50, 000 to 100, 000ft and go back to the macro picture. You know, this morning everything was rallying because there were news, there was, there were reports that Trump's tariffs were going to be. They're going to be, you know, they're going to be narrowed and that he's only going to focus on certain industries. Well, a headline, a red headline just came across my Bloomberg saying that Trump says that his tariffs will not be paired back and you can see bitcoin just go down from, you know, 99.5 down to 988 in just a, in literally a minute. And it's off of that headline that you know all of the, all the text are rallying off of this. And so this is the market is very tuned in to what those tariffs could be. I would like to actually hear Mike kind of talk about that.

Mike (17:12)

We got to piggyback on that. Let's tilt over to the macro. Looking for that was I saw that statement this morning as a reason copper is going up. I'm like do you think this person is going to take the risk of going down the history of Zawinie. Come on. That's what this, the book that the no free trade tells you what's going to happen. Everything that these books that even General McMaster wrote he's doing loyalists and there's going to be tariffs he made. We've seen this before made that mistake of believing the Chinese they're going to be hard and fast and come out. I mean if you don't expect that I'm like good luck. I mean it's just this is ways tilting and but people use that narrative position. So I want to tilt over a little bit to the macro coinmarketcap.com, the number three macro and spoke one. The macro here is the market cap of all cryptos. There's bitcoin, Ethereum and tether. Okay it's fighting with Ripple right now but let's just follow the macro. This space at least our current administrations figure out the legitimacy of how important this space is for the US what does tether hold us Treasuries. It was silly, stupid to push back on that. Now we're going the other way. The key point I want to make though for this morning is I deliberately wrote that article this morning because I'm neutral. I'm and I have to agitate if I don't. I'm a slacker like in this com if I disagree with everything we all say, I don't add any value to our listeners. And that's why my headline was something I wrote about when I'm get bearish treasury or cryptos is 2.4 million Bitcoin wannabes. Now that's the point I'm making is right now I'm more solidified in my view that the crypto space including Bitcoin is more. It is technically more correlated to the stock market than ever on a hundred day basis. And when we get that first 10 correct we'll have 10% correction and beta will get that. So I want to tilt over a little bit over to the macro. This money from our morning media for the first time in months. Then this has started last month is Gina Martin Adams who's been spot on in US stock market says volatility is typical with new president. Markets are way overdone. She's came out swinging that this market's just way too expensive US equities. And at the same time my colleague Anna Wong pointed out we're going to get a blowout payroll number for the at the end of Friday she's expecting 268k non farm payrolls. The unemployment rate is going go up. Pointing out we're just not creating jobs enough. Except that's going to be a bit of a factor to take the Fed out of the market. And that's the key thing that Gina pointed out is Fed's out of the market for easing until the stock market potentially goes down. So another thing that my other colleague pointed out, Audrey Child Friedman, is we're going to get probably one thing we should expect in FX is volatility. And that's the key thing I like to point out from a commodity standpoint. The Bloomberg commodity index, the 100 Week Bollinger Bannon Banger Band is the narrowest since 1997. That's over 25 years of it's. It's gonna move. We're gonna see volatility. And typically volatility is not good for risk assets. It's typically not good for what's what's filled over to Shiba Inu $14 billion of market cap. I'm just pointing out this is 1929 ish kind of stuff. I think prudent investors get it. You get you're seeing this flow into Bitcoin ETFs potentially like they flew into the Ark ETF back in 2021. Remember that didn't work out so well. But I'm just pointing out there's valuation metrics here that are silly, stupid. All the indications are they should be careful and it's not happening. It doesn't happen overnight. It's got to be difficult. But the macroeconomic outlook I think is oh, I'll end with this 1.6%. That's the yield on the US the Chinese 10 year note yield, that's 300 basis points below the US. The rest of the world is heading towards pretty severe deflationary recession. And I think cryptos are just on the cusp of solidifying that.

Scott Melker (20:47)

I know you just throw like a Shiba Inu out as an example. I just happen to be looking at coin market caps. I'm digging through it. I mean, does it matter to you that this did once have a 40/ something billion market cap at the peak of the 2021 bull market and now we're down, you know, here at 14 or 15? Because yes, it still has a huge market cap, but if you look at it, it is dramatically decreased and only slowly made lower highs. If you kind of look at this on the way down. So maybe this is a nothing against ship, but maybe something like this is a slowly dying. You know, it doesn't die overnight, but it's clearly gone way down since the froth of the last market. It hasn't.

Dave (21:24)

And by the way, but for both of you, Michael, maybe you can do this. If you, if you take these charts and you do all and you divide by the amount of dollars in circulation, that changes things as well, right? You know, because remember, you know that the denominator of all things, and that's the problem with a lot of the stock market analysis that we have in all these asset analysis, when you print an enormous amount of money, the denominator, it has to go somewhere. And remember, I've said this many times, the government, if you are smart, and I think Powell is smart, and I think our leadership leaders are smart, I may not agree with all of them all the time, and that's for sure. Their goal is to channel the monetary inflation that they are creating into assets rather than into consumer prices. And so when you engineer asset inflation, it's going to break past correlation models and analysis of all markets, with the exception, I think of the bond market, because that's more tethered to yield, which is why I believe the bond market is looking divergent from the stock market so strongly. And I think that if you normalize that, that divergence is nowhere near as large as you might think. And I'm curious what both of you think about that, because that's a thesis I was, I was developing over the weekend.

James (22:38)

Well, look, you, we, we got to go another, go back up to 100,000ft. We're about to trip the debt ceiling again. Right, so there it was suspended. It is not in effect right now, but because of the nature of the scheduling of the treasury auctions prior to the debt ceiling, you know, suspension, you're gonna have that. I think it's gonna be somewhere in the next week or so that today's the six. I think it's gonna be like the week of the, like 14th to 20th, something like somewhere around the inauguration we're gonna get a problem where Janet Yellen is going to be doing extraordinary measures again. And so what do we have, we have this week? We've got, I mean I've got the, I've got Bloomberg up right now. You know, forget about The T bills, 84 billion, 72 billion, 58 billion in, in you know, in T bills today. Obviously they just got to keep rolling those over and hope that everybody who, whose T bills mature and the, and the money markets goes right back into them. But they're also going to do $39 billion of 10 years tomorrow. Everything's moved up a day because of Jimmy Carter's memorial service on Thursday. So $39 billion of 10 years tomorrow. And you know, and then like this is going to get, and then 30 billion, the 30 year bonds, they've got a 22 billion dollar issue coming on Wednesday. So this is where you're going to start getting your clues I think to see how these things are going and, and where these yields are and, and that, that's going to give you an idea of whether or not the bond vigilantes are really back or not and worried about that inflation. We're talking about the resurgence of, of jobs that Mike is talking about. Like we'll see what the bond market thinks, but that's going to give you your first clues I think and that divergence is going to, you know, it's going to matter. Is money going to start pouring back into the bond market in the, into the treasury market because yields go up to a point where it starts to the longer term yields attract that or is the, is the, is the curve going to continue to, you know, to, to shape toward the, the short end? We'll see. So I think actually again I'd like to hear what Mike and his colleagues have been saying about this.

Mike (24:50)

I'll follow up on that. Is my colleague Ira Jersey, our chief equity interest rate strategist came and says his quote this morning is I got to stay off social media because everything on social media points out supply. He says the key problem with the US treasury market right now is the Fed pivot. I mean they're done, they're done easing markets priced for it until market tells them to ease. Inflation's ticking up a little bit, unemployment rates stable. But I like to point out bond vigilantes are clearly enforced on a global basis. 131 is the difference between the average of the top five GDPs in the country in the world, which includes India. The yield on their 10 yields lower than the US 10 year right now 4.62%. That's pretty extreme. And you see that and key thing I see that in things like gold versus copper taking off. And the key point I want to make though there is at some point I look at TLT as just a very positive earning put on the S&P 500 on the US stock market and it getting more value every day. Yeah, been completely wrong on there. But we haven't had a 10% correction in over a year. So to me that's the key thing that the market's got to worry about. And this typically the key point is the year after a president election usually has volatility. It's not like we don't have a volatile president here. And volatility usually means equity correction. So that so to me I think it's me a great trading environment. Last year was great for long and hold risk assets. I think this year it's the, the more tactically oriented hedge funds and things will do very well. And that doesn't start with getting excessively long risk assets here. And the riskiest and most expensive history are cryptos.

Scott Melker (26:27)

I mean I think it's worth noting really quickly Dave, before you jump in, Mike, we do have this chart that I've brought up a thousand times which is obviously Fed funds rate in red. Blue is the inverted or uninverted yield curve and black is what happens to the stock market. Always had the yield curve on invert, then the Fed pivot, then the stock market go down. We once again obviously had the yield curve uninverting. The Fed pivoting stock market is off this chart.

Dave (26:52)

Now the black, it's literally off the.

Scott Melker (26:54)

Chart at this point. But it does always, always happen. That could just be that 10% correction that you're talking about. But it does always happen that after the Fed pivots we tend to get a correction.

Dave (27:05)

Yeah, I think that it's the type of pivot if go back to macro Monday pass. I used to make the point that you know, this is the interest rate policy and this is what they're doing with the money supply. This is the one that matters. Right. And, and so I, I think that that one of the interesting theories that I've been thinking about is gold. And gold I think has been trading over the last few years extremely rationally, even as it, even as it, it is getting some of its life force sucked out. In terms of monetary, for, you know, monetary value by Bitcoin, that process has been pretty slow and pretty negligible so far. I think that it will change. But if you think about gold as a denominator for valuing all of these assets, I think you get very different answers. And if the reason gold as a denominator is because it's a proxy for non manipulated money supply, because everything else is manipulated in dollars. And so we all know famously how bitcoin's done versus gold this year and it's bumping up against that level. And we'll see what happens. I mean I'm pretty confident in what's going to occur, but the S and P versus gold doesn't quite look like that. So yes, your black line is up into the right, but what if you normalize that black line by the gold price on a certain date and then at that point I think you would see it looking a little bit more normal. And so Mike's point, which I tended to agree with for a while is we're probably going to get a correction. But if you get a big correction at the same time as a big pump in, in, in liquidity, it's very hard to get corrections in nominal terms. So nominal versus real terms matter. And I think that a lot of people get caught out not realizing that that's what's actually happening. And the reason that that perma bears have gotten absolutely annihilated over the last two or three years is because of that. Now that said, a point Mike made earlier is extremely important. People stocks ultimately are tethered to earnings and so you could be, you know, and it will tend to be that the biggest market downward moves happen when the last perma bear gets exhausted and capitulates. And are we finally getting close to that at some point this year? It's quite possible. And it's something that people should understand. And that's been what Mike has been saying. And I think that it's really important to look at those cross currents too long.

Mike (29:37)

So just colleague, we all know the quote. I think it's a consensus and everybody in the world knows US stock markets in the 95th to 97th percentile expensive in history. The key quotes from Gina this morning, Gina Martin Adams was expectations for earnings S&P 500 next year are over 20%. That's like, never works. And for the tech stocks, it's around 40%. So the last two years she was completely right on. Expectations were low and earnings beat. Now they're so high. That's typically what happens in bull markets. Never end and they usually blow off. And it could still go higher, but it's so extreme now. That's why I keep, you know, looking for alternatives. And the key thing here, here I'll give another prediction for next year, for this year, just for people can push back. So we've had four years of outflows in gold ETFs, yet gold's gone up pretty well. Investors don't give a damn why it doesn't have earnings. You can get better in S P500, except last year. And of course there's a better bitcoin, there's digital gold. Completely agree with that in the big picture. I predict this year we're gonna have a first year of inflows in gold ETFs in since. What was that last year? Since 2019. And the key trigger for that will be just a little bit of underperformance in stock market actually, versus gold. Last year was a bad year for S P 500 versus this stupid rock. That's not a good sign. So this key, and then you just look for triggers. What are the triggers for that to happen? Just a little back and film. Risk assets. What's the risk? Yes. What's a good indicator? Cryptos.

Dave (30:59)

Yeah, as I said, bitcoin. The rest of crypto, I think, are different here. But keep in mind that etf, the reason that you've seen that divergence is retail is basically saying, okay, fine, I don't need to put more money into gold. I'd rather allocate toward bitcoin, et cetera, et cetera. Central banks, sovereign wealth funds don't need to use US ETFs and pay an asset management fee to own gold. And so the buyers of gold are that. Those are asset allocators who look at the monetary debasement that's going on globally in the entirety of the civilized world and say, you know what? We need to own more gold. Predominantly your friends, your unlimited friendship or whatever you know, coming from. It's almost certain China, Russia and those and satellite states around them that have been buying. So it is interesting. I, I think you're probably wrong on the, on the etf. I thought, I think it's going to be very, very close. It's not gonna be a mass wall of money going into gold, into ETFs. But I think a mass wall of money from central banks looking to diversify could happen. But there are many other things that could happen and you know, it will really depend. I mean we're gonna have a really good idea of what's gonna actually happen when we see how fast the Senate can put the Trump team in place. Where you know what, when Scott Besant is in treasury, what does he do to the permanent staff there and what's actually happening in terms of policy. Same for Atkins and Brian Kinten's at the CFTC and sec. Same for Lutnick and Commerce. Same for a variety of others. That whether or not there's going to be a change in approach toward unleashing entrepreneurship or not, and if the answer is yes, then you could get some ridiculous growth numbers and that's what they're hoping for and that's what the hype is about. Now I want to be very clear about one thing. If it goes the way I hope it goes, the hope and the hope for America, it is not good for the largest companies. It is good for the economy. If the goal is to unleash economic growth by unleashing entrepreneurship, that does not mean earnings to the moon from companies that have oligopolistic advantages because those advantages are not going to be there. And that's a long term trend that I think people are not understanding. My macro trend. If you believe that the Trump administration will be successful in doing what they want to do is buy Russell Short S and P maybe more by more to be long. But at the end of the day it's really about where the benefits are going to go. What's been amazing to me is how little of any of this is priced in. We haven't seen any of these macro trades other than our companies going to be brutalized because of tariffs versus our companies going to make extra money because their their products are being protected. That's really the where the focus has been. No one's really gone a level down yet or at least that I've seen. It'd be interesting to hear what what people like Cliff Asness are doing and others are doing, Jeremy Grantham are doing in terms of that because there are some real macro trends that are not being talked about yet.

Scott Melker (34:19)

James, I see you brought a chart up.

James (34:21)

Yeah, just a reminder that that BlackRock ETF is the fastest growing ETF in the history right. Of ETF. So like this is. There's a. You can see the gold etf, you know, underneath it. This is just. It's insane how. How much demand there is for this. And there's a reason for it, and Dave kind of hit on it, is that, you know, Bitcoin has been very difficult for institutions to own because of the nature of, you know, how you hold the keys, who holds the keys, the. The compliance around it. It's just. It's the settlement of it, where you trade it. It's just been a nightmare for regular institutions who are not hedge funds, who are out there on the risk curve to own it. And now they can. It's so easy. And so that is a ma. That's still a massive tailwind for Bitcoin that people aren't even talking about, you know, having the ability to just buy an ETF and settle it with your prime broker or your. Or your custodian the way that you would a normal stock or. Or Apple or whatever. It's. This is a. It's a major. It's a major development that's still. That is still gathering momentum.

Scott Melker (35:33)

Sorry, I was gonna say really quickly and to that end, because, Dave, we talk about this all the time, then Mike, you can jump back in. We still have all this happening, right? We had the launch of the ETFs, but we are all well aware of the fact that that didn't mean that people could actually access them or purchase them. When you see things like only four days ago here, we missed this news, obviously, because it was away. But Morgan Stanley's E Trade explores offering crypto trading when that hasn't existed. When you start to look at all these people coming online, the access becoming, you know, more, I guess, universal for retail and institutions to actually buy this. It's hard, as they would say, to price in what's coming. You got to remember these are the most popular in history with most people or at least 50% of the people, according to Matt Hogan, still not even having access.

Mike (36:17)

So let me. Let me provide a little bit of provocative pushback on that. And to what you put out, James, you put out IAU. The biggest gold ETF is GLD. It's 74 billion.

James (36:27)

That's fair, but it's just the growth of it.

Mike (36:29)

Yeah, yeah, so get it. So here's the point. The thing I've Learned in my 40 years in commodities and 20 years in ETFs, is the next big trade for Bitcoin to go up is some kind of strategic welfare. Strategic Bitcoin reserve. If you're spoken on retail as the day where Dave mentioned ETF holders. I'm like, good luck with that one. It's a lesson I learned. Gold ETFs. I mean gold has been historically right now maybe on global basis, 1% of global portfolios, actually less. And ETF total holdings are 220 billion. They've been stuck there for four years. Why is that? Because they don't have earnings. Bitcoin's much more volatile. It doesn't have earnings. Yes, we get the present behind it. But what you just saw, I think this year we're going to look back from history. Like we saw the big pump in the ark funds. And four years ago I was like, yeah, okay, you got the initial people jump in. Matt Hogan, I get it. I'm a big fan of Matt Hogan. But he will. I can point out that what happens with ETFs and your competition income producing assets is they only go up so much unless you get. You have to have that performance. So to me, forget about ETFs. The next key thing for make Bitcoin hours. If the US does some kind of strategic Bitcoin reserve and other countries follow otherwise, ETFs are a bad way. I think a good way to expect it to put in a peak and potentially have peaked and do what all ETFs have done in history in commodities and gold is they get to a certain level and then you look at like yeah, sorry, but Nvidia is doing this and they have earnings and the QQ is doing this and they have earnings. And by the way, this is what I know.

Dave (38:07)

So every time I hear the earnings thing with Bitcoin, that conversation about Ethereum I think is exactly correct. So let's start with that, right? That there has to be value creation in the Ethereum ecosystem and not value bleeding for Ethereum to do what Scott believes it's going to do. And I'm less sanguine about that. I think that same thing is when you talk about XRP where I am much more sanguine about it. I think that the deals that Brad is signing are relevant there. But when you talk about Bitcoin it is I think 1/10 underpriced right now for what it is. We there is still enormous skepticism. Enormous skepticism. And what you don't we are not pricing in is 30, 40,000 financial advisors. Sorry, my cat's trying to unplug my computer.

Scott Melker (39:06)

The cat also drinks Dave's drinks. By the way.

Dave (39:08)

We are not pricing in tens of thousands of financial advisors being unlocked. Remember every broker dealer in the United States has been stonewalled by FINRA and the SEC for dating back to the last two years of the first Trump administration. We have six years of applications sitting with FINRA for broker dealers to be able to offer crypto trading services, Bitcoin service, it didn't matter how limited it was, none of them got approved other than Prometheum, which is of course insane to begin with because they have zero financial advisors and zero flows. So I think that saying that, that's not a big deal. I think you're missing the forest for the trees now. Strategic Bitcoin reserve. That is a massive catalyst. If it happens. Polymarket has it about 40 some odd percent of some sort. Once again, lots of deep skepticism about whether it will happen, whether other countries will do it. I mean, you know what everyone thinks of Dennis Porter. He's saying this is absolutely happening. You know, we talked about Melee years ago when he first got in or was first being done and Melee has not pushed in that direction yet. Look at the economic success he's been having in Argentina and tell me how long it's going to be if 2025 is the year that you're going to finally hear something going on with bitcoin. You saw what happened in El Salvador. People were like, oh my God. The IMF is telling me can't do this, he can't do that. Yeah, he had to give up his volcano bond, but what he is doing is buying more and he had to give up the wallet thing. But what he is doing is making it easier to buy and buying more and strengthening its ecosystem. So net, net, all these things are positive. We haven't talked about corporations. Corporations are copycats just like everybody else. Every CFO out there, I mean, come on, you know you're a CFO and you want to goose your stock price because you have employees who it's easier to retain if your stock price is going up. What are the best performing stocks worldwide? Pretty much the few, the handful, infinitesimal percentage of stocks that have added Bitcoin in their balance sheet. I mean these are catalysts. And, and, and I just, I'm pushing back against your, your point about catalysts, Mike? Not about your, the other points. I think that there are massive catalysts that are out there. We will see them and I fully expect to see at least in bitcoin to manifest. And the only thing that stops a massive bitcoin rally is a major stock market risk asset correction. Because at that point people sell what they have to say what they have to sell. Not what they want to sell. And that always happened.

Scott Melker (41:36)

How much does that change with ETFs? ETFs are still trading with the stock market. And if the volume and liquidity is large, largely going into ETFs and not necessarily into spot Bitcoin, do we at least see a dampening of that narrative? In the past, that was always the case.

Dave (41:50)

Obviously you'll never see a dampening of the narrative if there's a crash. But in a slow grind, yeah, the narrative go away. So gold can outperform the stock market for long periods of time. A stock market grinding lower, you could see gold grinding higher. A stock market that crashes, that people get real fear gold will crash with it. I mean, in, in the, the gfc, gold took three months. It did ultimately outperform dramatically, but it took three months of going down before it, it went back higher.

James (42:21)

Let's, let's go back to Dave's point about the demand from companies adding Bitcoin to their balance sheets. Look, you got to remember microstrategy stomached having an impaired asset on their balance sheet for years until the gap accounting was changed and a bear market just now in a bear market. So for people who don't know this, for the listeners who don't understand this, the gap accounting used to require Bitcoin to be held at, at the lower of cost or the lowest it's ever traded, as if it's an impaired asset. So if you bought it at 50, 000, it traded down to 16, 000. You had to hold it on your balance sheet at 16,000 a loss forever until you sold it in order to recoup that gain. If, when it went back up. So even if it went from 50 to 16, back to 70, you had to hold it at 16 000. You would have to physically sell it at 70 in order to, you know, get it marked back properly on your books. Now just now, it, that's changed where you hold it at fair market value. So instead of an impaired asset, so that, that is going to allow companies who are even on the fence thinking, oh, this volatile asset, I don't want to hold it on my balance sheet if it's, you know, it's volatile, as volatile as it is, and then have to hold an impaired asset for years until I sell it. So that is a big deal that people are just completely ignoring. And that will allow some companies to get over that hurdle of putting on their balance sheet.

Scott Melker (43:49)

Meanwhile, Bitcoin's pushing a hundred thousand mic. You're muted yeah, yeah.

Mike (43:52)

Let me just follow up one thing. What Dave said is, and you make this point all the time, and I think it's a little bit misunderstanding and certainly from a management standpoint, gold, before it corrected like it did in 2008, had been beating the S&P 500 for two years in a row, a lot. So it had a lot of profits to be taken out. So when the stock market crashed, sure, gold went down just as much and then it continued to take off. But it was a great hedge. Two years before those, those of us like me who started using as a hedge because I bought this massive house in Connecticut and I thought I knew prices were going to go down, I just hedged myself. That's the difference. Now, gold has been way underperforming almost every asset except for highly volatile risk assets like cryptos in the stock market for many years now. So that's my point is I'm not going for a crash at all. At some point we'll get it. I'm just going to just give me that first 10% correction. It'll be a great opportunity for trading. We're going to get it. Questions when, from where it's going to happen this year. Again, McGlone's wrong. Fine, that'd be wonderful. Volatility stays low, but that's not a.

James (44:51)

6% correction from the high. Right.

Mike (44:54)

So maybe it might, it might have started already and that means that maybe it has started and that might be. We'll see. But again, it's the, it's like you saw the headlines this morning. I just love that human nature of markets, when they come out, say, oh, yeah, we might not have Trump tariffs as much as he said, Mike. Yeah, the guy's not young. He tried this last time. It's like silly to even think that. But if it helps support your position, it helps you maybe make a move and make a quick trade. Sure. Let those things fly in the tape.

Scott Melker (45:19)

Bitcoin. Speaking of things flying in the tape, Bitcoin just pushed back through a hundred thousand, the first time since Christmas Eve when it crashed through 100,000 on the. On on the way down to a low around 91.

James (45:32)

Whatever that tariff news was services, PMI just came out, it was lighter than expected.

Scott Melker (45:36)

So, yeah, who knows with.

James (45:40)

With bitcoin, but that. Yeah, yeah.

Dave (45:42)

I mean none of the things that, that are, are going to create the rally are happening in this morning. What's happening now is it's trading like a risk asset on the basis of all the things that we've talked about and in a supply demand construct where there just really isn't supply. A couple of other facts which I always like to look at. Funding rate on Bitcoin right now still well below trend, well below normal. Forget speculation. So here we are at 100,000. The funding rate is below 0.01. It's actually 0.008, which is significant. The other thing I've been staring at like non stop through the end of the year is tether US dollar. Tether US dollar traded as much as a 30 basis point discount. It's down the, the, the discount is now down to less than 3 basis points. It will be at a premium at some point in the next couple of weeks, at which point you will look back and say, oh my God, that is coincident with the beginnings of alt season slash crypto rally. When you start seeing tether go back to a premium, that is a very strong indication of people buying it, giving up their yield in order to be able to buy crypto assets. And we've seen this many times. And if you're tracking that, the movement of that versus the velocity of the movement of the crypto world, you're well suited to understanding what's actually happening. So those two things are very, very important because what you're seeing is spot LED buying. You're not, this is not derivative LED buying. So every time you see crypto bull markets, when you look in 2021 that move, two thirds of it was led by derivatives. So every time Mike rebases and does his cherry picking at the top of the 221 market to where we are now, I'm like, wait a minute, you know, a lot of that, at least, at least 40% of that movement, just to be charitable, is was derivative lead froth at the, at the, the melt, the crack up boom kind of thing. And then when all the, the crises happened, you know, starting with Terra Luna, I don't want to revisit history, but we all know what that is. It took that froth out and it went in reverse and it overcorrected down to levels that are crazy. And it's funny because I'm going to get my, my schnibble that I didn't get off of FTX us. I'm going to get back into my Kraken account at some point in the next month I think.

Scott Melker (48:02)

Buy something. You'll buy something?

Dave (48:03)

Yeah, I'll buy something. But you know, it's like, it's not a lot, I mean, you know, but the $12,000 or whatever the hell it was, something like that based off of it was a lot of cat food, Dave.

James (48:14)

That's a lot.

Scott Melker (48:16)

It was 0.3 Monster Energy Drink.

Dave (48:19)

Well, think about it. It was over 0.3 Bitcoin. So what's 0.3 Bitcoin worth? Worth a lot more than $12,000 right now. Now obviously I had myself because you know, I'm not, not a fool but you know, there's, there's a lot of things that have happened here and you got to keep it all in person, in perspective. You know, we have global macro things. We've never. We're in totally uncharted territory here. We really are in terms of monetary deficits throughout.

James (48:46)

The entire amount of debt to GDP in the world is insane.

Dave (48:51)

I'm about to tee up. You know, Mike, now we've never seen anything like this on the scale that it is, except for maybe Japan, China going Japanese. I mean, I can't believe you didn't mention any of that. I mean the Chinese bond yield just take absolutely cratering. Since the last time we talked, we.

Mike (49:09)

Mentioned it, I mentioned it earlier. 1.6%.

Dave (49:13)

That is a very big deal. Right?

Mike (49:16)

Yeah, yeah, so, so you mentioned. Go ahead Scott, please. Well, you mentioned speculative froth and this is where I like to point out, is it different for a highly speculative, wonderfully traded traded risk assets, Speculative assets like cryptos. So speculative froth really helped me be able to pick a peak in copper. Last year when it prints $5.20 it dropped 20%. Now it's, it dropped to 4, just below 4. Now it's hanging around 4. That's really much an indicate of what's happening in, in China. Copper going down, industrial metals going down, China collapsing, completely dependent on fiscal monetary stimulus and going to face even more and more problems. I've just read the book the World on the Brink by Dmitri Imperatovich and it's pointed all those issues. But to me that's why I like to point out is I just don't think cryptos are that much different from the rules of markets in history. And I get the whole thing about debt to DDP, but China basically has debt to GDP of around 300%. Japan is a little closer to 250%. US is only 120% yet their yields have collapsed. Why it's. Let me finish one thing, Let me finish. I know we're going to go with that. Now you go next, James. It's just the point is then one thing the US has going is if We've had elevated risk assets, the stock market on a tear on a global basis, the most expensive ever. And that's going to keep yields high. It's at some point when that gives is when you're going to see the test of yields and Bitcoin and stuff. And that's why I think bond prices will go up and bitcoin will go down.

James (50:45)

Estimated U. S unfunded liabilities are at $225 trillion. So I don't know what you want to use for debt to gdp, but that is money that's owed to the system in the future. It's just reality.

Mike (50:59)

Well, Elon Musk is going to fix all that.

James (51:01)

It's an off balance sheet, you know, Enron, it's, it's Enron off balance sheet, you know, liability.

Dave (51:08)

Well, but it's in all seriousness, you know, look, Elon Musk is going to fix a lot of things if, if he and Vivek are allowed to do what they want to do. It will help a lot in terms of unleashing entrepreneurship and growth. It cannot fix unfunded liabilities unless politicians are going to all change their behavior. And I think that the odds of that are about the same as is me being the starting quarterback for the jets next year. Right. It's just not going to happen.

James (51:35)

Actually, that's, actually that's a non zero probability. Right.

Scott Melker (51:38)

Right now, yeah. Anything can happen.

Dave (51:40)

The, the, the what is relevant to what my question is is when the Japanese government, when you calculate Japanese debt to gdp, do they push their, their, their version of Medicare, their version of Medicaid to Medicare, Medicare and their version of Social Security off balance sheet or is it all part of the same budget? I think it's all part of the same budget.

Mike (52:05)

Glad you went there, Dave. It's, it's. The most important thing to mention is as far as statistical analysis and reliability is what country has the most reliable data on the planet? It's a country with the most, the greatest discourse. We have people like me ripping into everything all the time. You don't have that in most other countries, particularly the top, you know, particularly China. And that's the problem. So you can't really trust their data. But you can see things like bond yields. 1.6% in China. It's kind of hard to mess with the math of a bond yield telling you where things are going right now.

Dave (52:35)

Here's the difference. The Chinese currency is not the global reserve currency. No, the US Dollar is. And that's why things are the way they are good and bad. Good is we've been importing standard of living from other countries for decades. Bad. We've hollowed out our entire ability to make things in this country because we've made things more expensive to make in this country for two reasons. One, the one we're talking about and the other regulation. Now I think regulations are going to normalize was. I think that they're going to get. I think that that part will. Will help. But don't be surprised if J.D. vance is sitting there. If he was listening to us, he'd be nodding his head at some of this and he would say, yeah, you're right. Right. And that is a big deal. Right. If. And just think about what the macroeconomic impacts of a US government saying, you know what, we're okay with US the US dollar being strong, but maybe it's just a bit too strong.

Mike (53:32)

Well, that's the problem. History. It's always mean to people. We've never had problems, hardly ever problems of Weak Dollar Plaza Core 1985 it's always because of a too strong dollar. That's why things like a Bitcoin strategic Bitcoin reserve to support that are kind of silly. The problem with the US dollar is usually it's too strong. And that's the key thing, that key point of that book. It's no trade history from Lighthouse. It's things I talked about in the trading pits decades ago. It's about time that there is no. There's no such thing as free trade in the planet with the US it just cannot happen. No one can offer us any type of export market that we offer them. It's. You have to have tariffs offset that. And that's what to me is really howled out the heartland where I'm from and the manufacturing. But you think it's a problem here, go to Europe. And that's all that. All that deflation from the US tariffs on Chinese are going to be pressuring. All those products are going to Europe in massive deflation. So to me, this is an overdue fix. The problem is going to be pain in the short term because tariffs will start day one. All the regulation and the potential improvements will take acts of Congress and tax cuts will take acts of Congress. And that's more of a 2026 thing. 2025, you're going to see major profits reductions partly because why do we have, you know, why does the US corporations offshore to everything for cheapness to for more profits. That's going to push back in short.

Scott Melker (54:46)

Term really quickly before we Go. Since we have the title here, Bitcoin will explode in the next two weeks. Here's why. The answer to that, as I said in the intro, is the inauguration. We finally get to see Trump in action. But I think a lot of people would point to that as a sell the news event, at least in the short term.

James (55:00)

Right.

Scott Melker (55:00)

You get all the expectations and then you see a sell off. I can only say that we have this data here from coinDesk. High stakes 100k Bitcoin call signals expectation for record price jump after Trump's inaugurations. If you look at the option flow, people are betting on very big prices within the first month or two after the election. I don't know if that's something that you fade or ride the tail of, but just quickly around the horde. Gentlemen, your gut instinct, and this is not a price prediction or. Right. I think all of us maybe not might think that bitcoin goes up generally after the election because of the tailwinds. But do you think that at the election we see high volatility or some sort of potential sell off or huge pump because it's finally happening. James, I mean, what does your gut say to you if you were trading it?

James (55:45)

Well, my gut as a trader is you, you, you know, it's a contrarian view with everybody's looking in the same direction. So. But I, I just have a longer term view. I mean, I think that you get into, you get into spring and summer and, and barring a, you know, economic meltdown and to Mike's point of the, the stock market being overvalued and all that, barring some sort of meltdown, I think bitcoin's going to be somewhere between 20 and 50% higher going into the summer. That's just, that's just reality. There's so much tailwind on it, Dave.

Dave (56:23)

I mean, I agree with James. We know that. I think that there are going to be a lot, there's going to be a lot of volatility until around, you know, various and sundry appointments. And what will happen? How fast will the Senate act? How fast will things go? I think part of today's rally was, and it's a dumb story for it to matter, but Harris saying she would certify the results of the election today. I think there were people out there who thought that there was going. You're laughing, but I think there were people out there who thought, oh well, we're going to get saved by an 11th hour thing. And therefore people on the investing side, okay, maybe let's wait to see how this is going to happen.

James (57:03)

I think the Atlantic in the Atlantic write an article.

Dave (57:07)

Yeah, they did. So you know there's going to be. There will be. Markets right now move at faster than light speed because of the way algorithms work. People are analyzing news. There's AI agents who are looking at all sorts of things. Like I know a lot about high frequency trading and I understand that that's not nearly the driver that people think it is. But the technology has made market reaction to news dramatically faster. And at the same time you have a lot of potential news that's going to move markets. Right. There are so many different things. So I agree with Mike. I think you're going to see a lot of volatility. I think the direction for bitcoin, I think that you'll see for bitcoin to be higher. I think the direction for utility and tokens that are utility oriented to go higher. Right. I think that that's true. Sorry, my.

Scott Melker (58:01)

Take care of that cat, man.

Dave (58:03)

Yeah, you could be on camera. It's a very pretty cat, but. Yeah, but that, that's my thought. It's like we're going to see some ups and downs with a. A very large positive trend on bitcoin and an interesting set of trends around crypto. Obviously a rising head lifts all boats. So you'll see that.

Scott Melker (58:27)

Mike's up.

Mike (58:28)

I think it's going to be a great year for traders, less so for buy and hold. And I think when the year ends, bitcoin and cryptos are more likely to be up if the stock market's up and they're more likely to be down if the stock market's down but at a much higher volatility and a much greater ratio. And I think the risks are reversion.

Scott Melker (58:46)

I think that it'll be a volatile day or week, but tend to agree that the trend will be up because four year cycle has been working so far and if it ain't broke, don't try to fix it. I think 2025 is going to be a great year and it has. We're going to talk about this one next week. But if Trudeau leaves and you get, you know, Pierre Poilievre as the head of the Canadian government, we're gonna have a bitcoin strategic reserve probably in Canada as well. Just worth noting that that will be another company where that a country where that will happen most likely if we do get that regime change and that's the guy in power. So much so that Trudeau actually acknowledged the fact that he hated Pierre's views on cryptocurrencies multiple times. Right. So it's a real thing.

Dave (59:27)

Right. And he has holding a press conference today, by the way, which may be another reason why Bitcoin.

Mike (59:32)

Yeah.

Scott Melker (59:33)

So we'll see. It's just like endless tailwinds. It's all. I see. But guys, it's so great to be back here on macro Monday. I know that we ran over time once again. I gotta rush back over to spaces that we also haven't done for. For quite a while. Great perspective. Always a pleasure. It's going to be a really, really fun year regardless with, with the three of you gentlemen here. So thank you as always for coming. Thank you everybody for listening and we will see you all next week on Monday everybody. Have a good one. Bye.

Dave (60:03)

Let that's dope.