← The Wolf Of All Streets
Loading summary
Transcript90 lines
- [00:01]
Scott
Won the lottery today because I get to talk to Matt Hogan twice in an hour and a half. Matt, I don't know if you were on the docket, but I saw you in there and had to hit invite really fast.
- [00:11]
Matt Hogan
I appreciate it. I just thought I'd join in today.
- [00:14]
Scott
Love that. Absolutely love it. It's good because I had a lot more questions for you and wanted to continue the conversation. I mean. So what's our topic today? Bitcoin back to 79k after fake news on tariffs. I think we could probably do better than that, but actually bitcoin trading right now about 80,000. Obviously the fake news on tariffs part and, well, tariffs is spelled wrong, team. Look, I'm going to fix the title while we're doing this was yesterday when there was an announcement that tariffs were going to be basically suspended for 90 days except for China. And we saw the S and P, I think went up and down when we found out it was fake. 10% in under 10 minutes, which is just an insane level of volatility and money moving for the United States stock market. It's not like we're talking about what happened with Bonk or some new pump fund token that swung 10% in 10 minutes. You're talking about the S and P. I think this kind of displays how eager people are to trade on any good news. To me that's generally a better sign than I would have anticipated. And today, obviously we've got a pretty monster day so far. S and p is at 5:50. Well, I look at the spy, so 524 and generally all markets seem to be ripping at the moment. But what else is ripping? And maybe we could dive into this first 10 year yields. A lot of people said that the reason for these tariffs, for the policy in general was to lower yields to give the United States the opportunity to refinance the debt cheaper. What we've had so far is the Fed pivoting and lowering rates months ago and yields going up and then a very temporary dip in yields here while the stock market quote unquote crashed and we saw the announcement of tariffs and now trading higher than before. All of that US 10 year yields. Seems that the market, the bond market certainly is not buying any of it. And if there is an intentional effort here to drop yields, it ain't working. So we can maybe we'll dig in there and then we can talk about what that means for bitcoin. Matt, since I got you here, I mean, what are your thoughts? Yield's absolutely ripping, right? 4.2, 5% now?
- [02:36]
Matt Hogan
Yeah, absolutely. Well, I think the market realizes that tariffs are probably net inflationary or at least neutral. And, you know, I, I think it's, I think it's fiscal dominance. I think there is a higher run rate of inflation in the world today than there was in the past. And I, I don't think it's going to be possible to get these yields down substantially barring a global economic collapse. So I think they're going to stay high and I think that's going to lead to eventually money printing. I think that's the only way for the government to get out of this, which of course leads to Bitcoin up. So I think that's what we're learning today is barring an economic collapse, the yield's really not going to go below 4%. I don't think we're going to see an economic collapse. So I think this is the yield we're dealing with.
- [03:27]
Scott
That's wild. I mean, it's just really crazy to me that these are so incredibly sticky. And it makes you wonder who's selling these bonds right now in this environment? Is China just like retaliating behind the scenes and dumping off all the United States Treasuries they're holding?
- [03:49]
Matt Hogan
I think there's an element of that. I mean, you have to think that Trump is ripping up the common economic playbook. If you read what Ray Dalio is saying, sort of the next step is freezing interest payments to foreign holders of debt. And even if you don't think that's likely, you have to now think that something like that is positive. So it's probably sensible for foreign governments to move or at least diversify out of Treasuries and into an array of other reserve assets. And that puts pressure on yields. The flip side of your question, who's selling is who's buying, right? Who is so eager to refi $9 trillion in U.S. treasury debt over the next year or so? Where are those buyers coming from? And I think that contributes to this stickiness around 4% plus. It's a tough spot for the US to be in.
- [04:43]
Scott
Agree. We have some huge brains on stage today. This is awesome. Austin, jump on in.
- [04:49]
Austin
Yeah, so I'll say, Matt, I agree with a lot of what you just said. I've been saying for a while to people, US Yield curve dynamics are starting to look like those we traditionally associate with emerging markets. Right? And what that kind of ultimately means in terms of both fiscal dominance and market expectations is there's only going to be one way to get yields down material in the United States and that is stop running such a large deficit and get your fiscal house in order. Because if not exactly as Matt said, one would expect inflation over time, which would make you quite nervous about owning the long bond. So sort of the mark that you look for to see that this is happening is exactly what happened the last time the Fed cuts rates, which is you cut your front end rates and your back end rates go up because nobody finds you credible. And it's like, well, they're just going to have to pay for this later. So in terms of the tariff strategy in this idea that we could use that to lower rates, it is essentially the government and by the way, they're saying this publicly, saying we're smarter than the bond market, right? Like we can kind of fake them out by cutting rates right now and having them believe it and then refi, and then rates will go back up because that's kind of the only way this makes sense as a strategy. I would also say because of the weight of like debt that we already have outstanding. Again, back to EM Dynamics. We're now in the place where having a financial problem or economic slowdown probably increases tail rates because we're going to run a larger deficit as tax receipts fall, it's going to lead to stimulus spending, which makes the problem worse, not better. So I guess the long way of saying this is Congress doesn't appear to have the stomach to spend less money. If we look at what's going on with the debt ceiling, with continuing resolutions, we're trying to do literally everything we can other than the one thing we actually need to do to bring rates back down, which is cut spending.
- [06:43]
Scott
Go.
- [06:46]
Joe
Okay, so the reason why I don't think this is an inflation story at all. Just look at the swaps year, five years, they're the lowest since 2022. The market we're pricing in more inflation. You wouldn't see that action in the swaps market. So that's number one. Number two for the folks that keep repeating this like we have to roll $9 trillion of debt worth of debt. We rolled 7.6 trillion last year at higher rates. So explain to me why that's like going to be more challenging this year than it was going to be last year. It's, it's, it's, you know, marginally higher, but I think that's significant. The other folks that keep repeating this, the 10 year is ripping. 10 year is basically where it was in December and, and it was for most of March. So Basically just trading within a range, bouncing around, which you know is coincident with, I think, the expectation in the marketplace that you're not entering a recession, you're not going to see growth collapse. And I think it's significant that you're seeing this reaction from the bond, from the bond market based on the news we got yesterday, which is a constant trickle of three things. Number one, Bassen is going to continue to be involved in the trade talks which the market loves. They trust him way more than Lennox. Number two, you have the despite their stated purpose that they're not willing to negotiate, there's clear overtures that the Trump administration wants to negotiate on tariffs. They want to figure out some framework that can be put in place. They're not just going to keep their foot to the pedal on the tariffs without some overtures to try to resolve this. That's really important because if you keep the rates at current levels, I've said publicly, I think you get a recession and the market's basically pricing that out by the sell off you're seeing particularly at the long end. Number three, if you are certainly concerned about rolling the 10 trillion and the reason why this argument never made sense, that they want to lower long end rates so that they can refinance and lock in duration, then why is the QRA guidance that we got to continue to issue front end instruments, why are we going to continue to look at that short year to year sub two year maturities? That makes no sense. Right? If you, if your goal is I'm going to crush the 10 year yield and then I'm going to roll the debt, then why aren't you supplying duration in the market? And vested hasn't so far. So for all those reasons, I don't think the inflation story is really the key thing to focus on.
- [08:53]
Scott
That was comprehensive. But Joe, I wasn't saying that I necessarily believe they're trying to get rates down to refinance. I'm saying that that's been a persistent narrative and people in the administration have said it implicitly. Right. I mean Donald Trump makes no qualms about saying Fed needs to cut. We, you know, and we have Besson obviously talk problems with the debt. Lnik's doing that in his own way as well. So I think it's just confusing messaging. What is the intention with rates if not to lower them at this point? And why would the Fed even consider cutting right now?
- [09:30]
Joe
The Fed has no reason to consider cutting. You're exactly right. I mean look, we're still running closer to Three than two. I think there is sticky inflation. I said I think you're in real problem here for a long and by the way the reason we know that this is a long run issue is because there's so much of a frozen housing market in the United States and the OER is one of the dominant themes for why owners equivalent rent for why we're continuing to see, you know, sticky inflation. So unless you're going to see real estate prices collapse across the board, I don't know how you get back down to two. It doesn't, doesn't seem to make sense. I mean from my standpoint I think this eventually ends with the Fed implicitly. They're never going to say it explicitly but basically giving up on the 2% target. That's really how it has to end, I think.
- [10:14]
Scott
Yeah, a lot of people appointed to that and just notable that in his sort of, in his tirade, calm tirade yesterday Larry Fink had a lot to say including that he thinks we're already in a recession. He thinks that we could see a 20% more downturn on stocks. Obviously not a big fan of the tariffs but also said that he would not exclude the idea of another rate hike coming.
- [10:43]
Joe
Yeah, it makes sense, right? Totally makes sense.
- [10:49]
Scott
That obviously. Sorry, I think my mic was not working. I was gonna say that flies a bit in the face of what the administration has been saying, but. Go ahead, Dave.
- [10:58]
Dave
Yeah, I mean look, there's a lot of cross currents here. You know both Joe and Austin can be reconciled by understanding, you know there's. If you look at what happened in Japan where effect there, their debt to GDP is insane but they have a forced pool of saving. And the real question is if the US cranks drill baby drill and gets people to buy our energy like he's trying to do with Europe. It's a question of recycling those dollars back into Treasuries, which is what the Middle east has been doing for all those years. So it's all interconnected. The interesting thing from a market's perspective however is the ten year went down. Look, the volatility in the tenure over the last couple days given no interest rate moves is breathtaking if you really think about it. You're seeing 30 basis points in a day when there's no rate cuts and no policy changes as a percentage is a pretty big move up and down. Four and a quarter is still well within. Anything less than four and a half is still better than when Pesit took over. So that's not really a problem. But what the market is saying is like, okay, yeah, maybe we're not going to end up in a recession. Maybe we're going to be able to muddle this thing through. But does a recession matter? I mean we had a recession last year, although they renamed it as something else. What does matter is if you look at the long term policy of re industrializing America, the people in charge aren't fools. I mean we've said it many, many times. Scott, you could tariff people to incentivize production of US factories, but US factories take years to come online and during that period of time when factories are being built, you're not collecting tax receipts. So these people aren't dumb. The reason they know that the deficit is going to blow out is because their strategy is to make it blow out. Shifting from consumers and companies, basically doing things quickly by assembling parts from abroad to domestic production is going to be a lowering of GDP in order to raise GDP in the end. I mean that short term pain goes both ways.
- [12:58]
Scott
Sorry, can I ask you something though? So this is where the narrative gets so muddled for. Because we keep hearing the administration and many of them say exactly what you just said, which is bring it all home. Domestic, obviously, manufacturing, it's all coming home. This is the point of tariffs, External Revenue Service. We've all heard the narratives. And then on the other side we say Besson's going to go negotiate with Japan. We need to get no tariffs. Elon Musk saying no tariffs, free trade. Those things just don't make any sense together.
- [13:31]
Dave
No, they make perfect sense. So let me explain. So there's headline and bullshit and rabble rousing stuff. There are things we can build in America. Okay. And there are things we can't. Let's just be. I mean, yeah, you obviously tariff the.
- [13:43]
Scott
Thing that you can make and you don't tear for things that you can.
- [13:45]
Dave
So what industries does he want to re establish in America? He wants to re establish things that with automation we can be competitive. So building cars, rolling steel, those aren't.
- [13:56]
Scott
Jobs, those are robots.
- [13:57]
Dave
No, no, no, that's, that's. Once again it's. Nothing is binary, Scott. See people in markets love to be binary about this shit. A roboticized factory employs quite a few people, doesn't employ as many people as a non roboticized factory, but it still employs a lot of people. A roboticized steel factory or steel works employs people, just doesn't employ quite as many. And so it's a question of degree and things that we should have a natural competitive Advantage. I mean steel is bloody obviously, right? You know, it's bloody obvious we have all the raw materials right now. We send the raw materials abroad for them to roll it. That's just stupid. The reason is because our factories were, were completely uneconomical because they weren't, they had no automation whatsoever. But there are a lot of industries when you go up and down and this is yeoman's work to do this, there are a lot of industries that can be re industrialized in America and a lot that can't. We are not going to bring the garment industry back to America. This isn't going to happen. Right. It's just not for, for, you know, because the labor, labor in just, just to be to throw some figures, labor as a percent of cost in garments goes from, you know, 20 over 25 to as much as 50% of the cost. Whereas in most industries labor is between 15 and 20 or in some less than 10% of the total cost. Well, where labor is a high percentage of the cost. You're not bringing those jobs back here because Americans don't, you know, aren't going to work for the same as people in Vietnam. From. It's just as simple as that. But, but the reason I'm mentioning this from a market's perspective is in the stock market there will be winners, there will be losers. It's not a broad based sell off. In the crypto market, you know, we have our speculative stuff which everyone is trashing now because they're terrified. This is in my opinion a phenomenal time to be looking for actual winners in crypto. And for bitcoin we have deficits as far as the eye can see. Right. You know, Doge is going to make things more efficient if we're lucky. More importantly, he's going to deregulate. So it goes from instead of 18 months, an environmental impact assessment down to two months and instead of getting clearing all your permitting taking two years, take that down to maybe four to five months and be able to build factories in a year that now is taking four to five years. Right. And I know the math didn't exactly add up because there's other steps, but more or less they should be able to drop about 80% of the time it takes to build stuff here, you know, with some reasonable environmental, you know, controls. But that's what we really hope for. But if you think about it from a bitcoin perspective, and I always laugh, you know, Matt's up here. Yeah, Matt, you're there. I mean there's literally no road which doesn't have continued monetary printing. There just isn't. And so the sole question is, will that monetary printing, inflation go into assets or go into consumer prices? Well, tariffs tend to shove it into consumer prices, and that's why the market is freaking out. But the truth is they can do everything they can to push it into assets. And that's, you know, that. That's really what matters.
- [16:47]
Scott
Yeah, I mean, that's the conversation we had this morning. Print if you do, print if you don't. Right.
- [16:54]
Matt Hogan
That's where the roads lead. That's where the roads lead. I can't, I can't figure out, looking at the scenario, a way that we're willing to stomach that doesn't lead to that. So that's, that's, to me, the overwhelming takeaway from the last few days is.
- [17:07]
Joe
Your expectation that the Fed's going to restart qe. Is that when you're saying print? I mean, is that, or are you referring to just spending?
- [17:15]
Matt Hogan
I don't, I don't know. I don't know. Is the answer to that? I'm not sure of that. I just think it's going to end up probably with deficit spending. Right. Until it gets to a critical point, I guess that's what I find the most likely.
- [17:31]
Joe
Yeah. Well, the reason I speak start there is because deficit spending is depriving liquidity from the market. You're taking money from people that have the money in the private sector and you're financing the government spending. So, yeah, whatever the yield is for that, that the market's gonna bear, that's not, you know, quote unquote, monetary printing. You're just, you're taking money from the private sector to finance the government's expenditures. You're redistributing wealth, fair enough. But you're taking money.
- [17:57]
Scott
So, you know, what if instead of the dichotomy between asset prices and consumer prices, the tariffs lead to an investment in hard assets, Right? Like manufacturing, you know, production here in the U.S. you know, isn't that like an alternative scenario? Isn't that, like, the goal of the tariffs is to be able to have, like a reinvestment of hard assets in the U.S. austin, go ahead. Austin. I don't know if you had an answer to that question or wanted to speak generally.
- [18:34]
Austin
Sorry, I am failing to take myself off mute, so I would raise.
- [18:38]
Scott
I'm the worst at the mic, by the way. Like, I do this every single day, and half the time I hit it. Nothing happens because of the glitches. So I think Everyone, at this point.
- [18:47]
Austin
I feel your pain. So I, I would say a couple of things. One, to go back to our original point of how we got here in the market volatility, everything Dave says is a totally plausible case for what the administration should in theory be doing. I'm not sure that lines up with what they're actually doing or the words that are coming from some of the people of the administration. Because if our goal, which by the way I would support is to onshore certain systemically important industries to the United States, you know, if we're thinking of defense, manufacturing, pharmaceuticals, things of that sort, maker makes sense to have capacity here and to automate factories so we can do it in an efficient way. All of that is a coherent theory that absolutely is not explained by putting like highest in class tariffs on Madagascar right back to the point of like they produce vanilla. We really can't make that here. And the labor costs would be insane. So I think part of why you're seeing things like incredibly whippy moves in equities, markets at scale, why the tenure is all over the map without policy changes. Right. And again, to some extent why I share the view that long Bitcoin is probably a good trade as a proxy for government dysfunction, is there's a lot of things we would like for them to be doing in theory and then there's what they're actually communicating to the market. And the disconnect between those two things, I think is what's going to produce some of the significant volatility here. Because to go all the way around to the point just before me, if I'm a factory owner or if I'm somebody with capital and I'm looking at investing in that and I want to make a decision on a five to ten year timeframe. And I have zero clarity on are these tariffs real? Is this a negotiating position? Actually I'm going to end up with complete free trade. Is it something in the middle? Are some places going to be hit or not others? The correct answer right now is sit on your hands.
- [20:40]
Dave
Yeah, that's true based on the public statements that we're hearing. And that's why the dichotomy, someone mentioned it before, that the market likes it when our Treasury Secretary speaks and gets freaked out when the Commerce Secretary speaks. And so, you know, there's a couple of dynamics at play. Like I was at a conference, a completely packed and full conference of traditional financial people from, you know, Security Traders association of New York yesterday and you know, there are a couple of takeaways from that. But effectively, you know, people, you would not think, you would think that Lutnick had been fired. But basically the common thought is that, that Donald Trump, one of his good qualities that is impossible to argue with is that he's a very loyal human being to people who are loyal to him. And so he is not going to, it's going to take a lot before he's going to shoot, you know, Howard in the head. But people in that room, many of which know him well, say, yeah, but Howard goes off and says stuff all the time. But, but when it, when it comes to behind closed doors is doing something differently or whatever the truth is, is that putting tariffs on Madagascar, putting tariffs on Israel, for Christ's sakes, who had literally lowered their tariffs to zero the week before, was just stupid because it was looking at the outcomes. And that's why you're not hearing that anymore. And the reason the market that NASDAQ's up 4% today is because the people are trading and saying, you know what, they're gonna, they're not gonna be this dumb now. Maybe they will be. And you're possibly right, Austin, but I think what happens behind closed doors for multinationals that are looking at investing billions in the United States is far different than what we're seeing in the newspaper and certainly what's reported in the national media, who will immediately take anything that comes out of the Trump administration that, that, that they could potentially use against him and magnify it, you know, tenfold. And if you don't, that's, that's the world we live in. What I find fascinating is how retail hasn't been swayed by that because you would think retail investors would have just said oh my God and panicked sold over the weekend, but they didn't. And that is, is actually extremely important takeaway in market dynamics. It basically says that people don't believe the crap they read in the media anymore. And don't underestimate how important that is.
- [22:56]
Scott
This means return to status quo, print money, raise debt ceiling, spend it.
- [23:04]
Dave
They're going to pick, they want to pick their fight. Look, anyone who knows anything about war, you don't want to fight a multi front war. And what happened was with the famous chart, they opened two fronts in the war. War number one is stand behind what Doge is doing and stand behind true deregulation and try to get Congress to get behind deregulation. And that's actually the really important war. War number two is try to put tariff policy, you know, was opening the tariff policy thing and having every single person in Congress screaming, oh, my God, you're killing the economy. Look what's happening in the stock market. These are people who wouldn't. Could barely spell stock market, most of them. But, you know, whatever. You know, from an administrative point of view, trying to get things done, that was horrendous. And so they want to tamp that down as best as possible, which is why I think you're going to see the rhetoric slow. Not necessarily because they're not negotiating like crazy behind closed doors to try to get things done, but because they just can't afford it in the court of. In the court of public opinion to. To be fighting both of these things. Because the one they need to reinvigorate American manufacturing is deregulation, and they know it.
- [24:07]
Scott
Yeah, so we're not going to get an external revenue service badly.
- [24:12]
Dave
Well, I mean, look, you get to raise some money. It's just, it's a. Look, taxes are taxes. When you tax something, you get less of it. We know that. And therefore your revenue projections, if it doesn't, assume you get less of it, are always wrong. Well, okay, that's true with every single tax. Whether it's a tariff tax, whether it's a national sales tax, whether it's, you know, it's an income tax, doesn't matter. Whenever you tax something, you get less of it. And, you know, it's. It's why. It's literally why the left policy proceeds don't work, because they just ignore that. They ignore human incentives. And that's why, you know, a lot of people who are socially liberal still end up, you know, acting and feeling like, like, like Republicans, even though they disagree with a lot of what they say. Because you have to recognize human incentives in tariffs. You know, everyone's freaking out because the incentives, it's like, well, wait a minute, I'm gonna have to pay that much more. I'm gonna have to Pay, you know, 10,000, $30,000 for an iPhone because, you know, I can't source shit here. Well, I mean, obviously that's not gonna make people happy. Right?
- [25:11]
Scott
Yeah, Joe, then, Gareth.
- [25:14]
Joe
Okay, really, really quick here. The comment that the idea behind the tariffs is to strategically onshore industries, I think is refuted by some of the exemptions we have. And this isn't just opinions that they're saying two extremely strategically important industries, pharmaceuticals and semiconductors, are exempt from all terrorists. Right? That is not just a mistake. Those are things we should be building in the United States. Those are massively important industries. And they were Exempt. Right. So the, the idea that tariffs would drive them back to the United States, but why didn't they put the tariffs on those industries? So, number two, I think one way you can look at the tariffs, which are applied in an indiscriminate way, you know, this 10% across the board, ratcheting up from there, depending on trade deficits, which makes no sense, is to view them as a symbolic overture. You're trying to start the negotiation. This is classic Trump. This is shock and awe. Get a big thing out there, make a big Liberation day celebration, and then begin negotiations with everyone. Right. It's not about the. And you make people struggle to figure out, well, wait a second, how do. Why are you using the trade deficit, which doesn't necessarily have a relationship with tariffs? Why are you using that as some of the implicit calculations for the tariffs, if not to try to get a broader discussion about how to get people to the table? And clearly there are entities out there, or countries rather, that are more important than others. China is way more important than Madagascar. But if you throw across this indiscriminately, what you're trying to do is trying to get a critical mass with certain countries and entities to come along. And it's almost like a prisoner's dilemma. Right. The guys who act first, whether it's Japan or some of these others that have said, we're having negotiation, they get the best deal with the man, Donald Trump. So that's personally my view of it. And I think some of the statements about public and some of the reporting that's been private.
- [27:02]
Scott
Right.
- [27:02]
Joe
About what the intent of the administration's policy is. That's it. They're trying to get this huge, broad discussion with all countries involved. Everybody has a seat at the table to varying degrees of importance, of course. But you're trying to renegotiate all this as much as you can, knowing, Right. That there are lawsuits flying. I'm aware of ones getting filed today challenging whether the President has authority to do any of this. The Emily Lay suit out of Florida, I don't know if you covered that in a prior space, but, you know, it's quite, it's quite possible that the president doesn't have authority to do the vast majority of these tariffs. So, anyway, I'll stop there.
- [27:37]
Scott
Yeah, we didn't cover it because I'm doing it because to be fair, I've done a pretty bad job of keeping this crypto town hall. It's been macro town hall, but we do every once in a while trying to actually Talk about crypto just been a lot more difficult in context of everything happening in the world at the moment. Gareth, go ahead.
- [27:53]
Gareth
Yeah, I'll do that for you. Hold my beer.
- [27:57]
Scott
This is why I've invited you to help post at times, Gareth, you know. Yes.
- [28:01]
Gareth
Yeah. Steer it back to the stuff that matters, like bitcoin. Yeah. Hello to everyone. I'm at Paris Blockchain Week. It's been a really busy day, and I wanted to steer the conversation back to bitcoin and the impact of the tariffs on bitcoin in particular. I had some interesting conversations with a few people in the industry last night. Eric Turner from Masari had some really interesting takes, and he was basically saying that he doesn't think we've even entered the bull market yet. And this, you know, this big drawdown presents a very big opportunity. But even more interestingly, I spoke to Adam back in the opening panel of Paris Blockchain Week this morning, and, you know, he's a really knowledgeable person when it comes to trading to bitcoin fundamentals, everything to do with bitcoin. And he basically said to me that, you know, this is a fantastic opportunity for many people to, you know, increase their position in bitcoin if they believe in the fundamentals. And, you know, basically, for the love of God, don't sell your SATs right now, because this is a fantastic accumulation phase. If his predictions for where the price of bitcoin should go in the next six months to a year. About a year ago, we had a conversation about where he saw the bull run going, and he had said to me that about 18 months after a halving event, you see the peak of, you know, previous cycles, and obviously, you can throw that rule book out the window now because of everything that has happened on a macro level. But. But Adam was basically saying that he's fairly confident that some. Sometime in 2026 already, you should be seeing a peak, and we're going to have a very much prolonged bull run from here. And if Trump's. You know, I know a lot of critics have been for and against the tariffs. Anthony Pompeo has been fairly vocal about why he thinks they're good. Scott, you've been pretty vocal about why you think they're bad. Everyone has merits, and I think a big takeaway has been part of the goal was to reduce the interest rates so that the US can refinance their debt. Right. A part of this would be not qe, but, you know, some fresh capital back into the markets and that could potentially flow into Bitcoin. And these are some of the takeaways that Adam Back was kind of giving me today and basically saying, like, this is actually a very good thing for bitcoin. And from a fundamental standpoint, the sort of decoupling that happened over the last three days, despite Monday's kind of downturn into the mid 70 thousands, Bitcoin has bounced back quite nicely and it's definitely shown a resiliency that the rest of the stock markets hadn't. So, you know, for us that are mainly covering bitcoin and cryptocurrency news, it's been hugely fascinating. I think a lot of bitcoin maxis were super stoked with what happened last week, although everything was in the red. And it. It really does give you a lot of food for thought. I'm not, I'm not into giving investment advice or anything, but I do feel fairly strongly convicted about bitcoin given everything that has happened. And I think a lot of people are really starting to want to understand the fundamentals of money and how it works. And these kind of situations are where people need to start understanding bitcoin and start educating themselves. We've got this video coming up on YouTube later today, the Cointelegraph YouTube with Adam back. So if you care to watch that, some really fantastic insights on what the tariffs mean for. For bitcoin, for. For those listeners out there that are keen to get some. Some good insights there. And that's just my two cents on that.
- [31:34]
Scott
Did he by chance tell you that he's Satoshi Nakamoto in that conversation?
- [31:40]
Gareth
I tend not to ask him that because he gets a little bit upset whenever we do.
- [31:44]
Scott
I know, that's why you have to ask. Come on, Gareth, do your job.
- [31:47]
Gareth
We can. Let's read between the lines.
- [31:51]
Scott
Dave, go ahead.
- [31:52]
Dave
Hey, Gareth, has anybody. Have you talked to anybody who's talked or commented or noticed or expressed reasoning behind how the bitcoin hash rate has spiked basically 20% over the last month or so to a new all time high?
- [32:11]
Gareth
I did actually ask Adam about that on stage because about a year ago he launched a fund, I don't know if you guys remember it, it was called Basic Notes. And essentially the basis of this investment vehicle was you. You buy a note and they use the proceeds of those notes to buy a load of secondary, you know, bitcoin miners on the market. At some stage during the bull run. I'm sorry, if you can hear sirens in the background at some stage during the bull market, the thesis is that there's Going to be a huge demand for mining equipment as the price of bitcoin appreciates. And having a huge surplus of these, these miners would help. Adam basically said that look like higher hash rate is not great for bitcoin miners because it means that it's way harder to mine bitcoin. It's less lucrative, there's less bottom line profit for all the bitcoin miners. I didn't ask him for his thoughts directly on the new all time high of the bitcoin hash rate, which happened over the weekend. But to me it just kind of signaled that, you know, despite all the uncertainty in the markets, companies that are mining bitcoin and are wanting to participate in that economy are, are not slowing down and they continue to deploy more and more hash rate. Obviously as the price comes down, it makes it difficult. And you know, I'm sure that there will be some operations that just aren't unprofitable if bitcoin's sitting below 80,000. I haven't done my, my math there, Dave, so I can't comment too accurately. But yeah, Adam, Adam was kind of, you know, saying that tariffs might have an interesting impact on miners in the US as well. Right. Because a lot of these miners do deals with Bitmain and other manufacturers in other countries. And now you're going to have these tariffs that. Yeah, the.
- [34:02]
Scott
Yeah, what if your miner costs twice as much? Yeah, what if your ASA costs twice as much?
- [34:06]
Gareth
Right, well, exactly. It's gonna, it's gonna impact the market. But smart people like Adam who have bought a load of miners and has them stored in warehouses stand to gain from this. And I mean, like, this was a year, this was almost two years ago. So he had no foresight that Trump was going to introduce these kind of tariffs and it would have this impact. But this is one of the things that I want to ask some of the, you know, the big bitcoin mining execs in the next six weeks is how is this going to impact their businesses? Really? Like they're constantly acquiring new miners, a lot of them coming from Bitmain, Canaan, you know, all these big manufacturers. And they're going to have to factor in all these additional costs. It's going to make it more difficult. And I don't think that the infrastructure exists to build a load of bitcoin miners in the US at the moment. Maybe some hardware manufacturers can pivot their business and serve that market. Especially if, you know, like the Trumps have gone into bitcoin mining with their, their new initiative with, with Hut 8 last week that they announced. Truly, you know, they shot themselves in the foot here as well.
- [35:16]
Scott
Dave, does that answer your questions?
- [35:19]
Dave
No, it doesn't. Because, you know, one of the theories that I'd heard is that there's some sovereigns or large, you know, national, you know, accumulation of hash rate and that there's some really interesting geopolitical stuff going on here in some game theory. And I was curious if people are talking about that.
- [35:40]
Gareth
No one, no one had mentioned it at Paris Blockchain Week, Dave, but it's definitely something I can poke some feelers out about. It's a very interesting point that you make though. I mean, if people see a gap in the market and they know that there's going to be a crunch in terms of new hardware availability in the US and the US is, is really trying to accumulate Bitcoin in, in every way, shape or form. If they, they start to acquire it in a budget neutral way, you know.
- [36:07]
Dave
Yeah.
- [36:07]
Gareth
I mean, other nations, API, if they deploy a load of hash rate, they, they can acquire more bitcoin. Right. And, and front run the U.S. if that's going to be the eventual outcome that happens.
- [36:17]
Dave
Well, I mean, from an economic point of view, if you think about it, you know, investment in hash rate and continuing to bring it all online is clearly expectation. It means two things. It's, you're expecting profit or you don't care. Either way, it's exceedingly unlikely that it's leveraged and it's probably secured. So that's, that's, to me, it's a very bullish thing. But it's a bullish thing because what it's telling you is that the investment in the network is accelerating and people don't tend to do that if they don't, if they, if they don't have confidence. And that confidence, it's only relevant when you put your money where your mouth is. A lot of people could say I'm bullish, that's cool. But if they need to eat and that's their only asset, they sell it. And that's what we saw with Bitcoin recently. But if people are investing in mining equipment, and they obviously may not have, unless they're stupid, then they have their financing secured to the point where they don't have to worry about selling Bitcoin for a fairly lengthy period of time. So it is, it's a little bit different.
- [37:18]
Gareth
They're anticipating the upside. Right. They're willing to bear the brunt of the cost now in order to accumulate more bitcoin and profit from its appreciation in price six months to a year from now, which is what people like Adam Beck are saying.
- [37:34]
Scott
Aerith, can I ask you just anecdotally, what the vibe is at Paris Blockchain Week? I was actually supposed to be there. You and I actually hosted the stage together last year, come to think of it.
- [37:44]
Gareth
Yeah, we did. That was the first time we met, actually. A long way since.
- [37:49]
Scott
Yeah, I was good. It's just the big trip for me these days and actually tomorrow I have to be in Miami for another interview. But what's the vibe there this year? Because the conferences can be so market dependent on how it feels.
- [38:04]
Gareth
Yeah, I've been so pleasantly surprised. Unfortunately, quite a few big name speakers pulled out. I was supposed to do a fireside with Anthony Scaramucci tomorrow and he's had a personal issue so he can't make the event. But genuinely the turnout has been fantastic. Pretty much speaker halls, all the vendors are full. Really, it's super busy. I would say a lot better than last year, Scott. And yeah, you would think that given there's so much red across the markets that it wouldn't be like that. But I think people are genuinely still feeling very bullish and all the people that I've spoken to that have come from the US are really giving off a very positive sentiment about what's happening. We just had an X space with Eleanor Terrett and she was kind of, you know, talking about how bullish it is in the us and I went to Pumps Bitcoin Investor Week, you know, six weeks ago in New York and I was really blown away by that. So overall I still feel very positive about what's happening and I think that there is a lot of positive sentiment despite what has happened in the last 10 days. I mean, this, look, this tariff stuff is unprecedented and no one has a crystal ball. And you know, like as a journalist, you want to ask people in the know what they know so that you can inform your readers. No one really knows what's going to happen, but there's still a lot of people that are pretty convicted about bitcoin in particular. And that's kind of my, my big takeaway and what I'm trying to focus on.
- [39:31]
Scott
Yeah, I guess as an aside, it's not really about the last 10 days. Right. I think that obviously this cycle has been largely different in people's minds. We've seen bitcoin moving exceptionally well and of course I've seen meme coin madness. But I think there's been a feeling I certainly share it, that a lot of the utility in the middle has been completely lost. I think there's been a bit of despair that I've seen that, you know, nothing else is moving. Nothing else. You know, we're a cycle later and where's our mainstream adoption outside of Bitcoin and stablecoins? When are we going to see, you know, all these AAA games.
- [40:12]
Noah
Adoption of anything other than Bitcoin and stablecoins?
- [40:16]
Scott
Right. And listen, I am not disagreeing with you or, or Meme Coins being the greatest casino. Right. We've definitely seen mainstream adoption of the most vicious version of speculation. Noah. Right. But I think if you've been here, obviously this is, I guess, my third cycle. Technically. The promise of all these things that were supposed to happen with blockchain has not come to fruition yet. Right. And so I think that there's a lot of people who are disillusioned and Gareth, when I go to conferences, I sometimes feel that depending on where we are in the cycle. But if you're not feeling any of that, that's great. Unless I go to Asia, of course, where it's like the never ending bull market, but.
- [40:55]
Gareth
Well, exactly. I don't, I don't think I, I completely hear where you're coming from, Scott. There's a lot of people that invested in a lot of utility tokens and a lot of other alternative layer ones and they're kind of saying like, hey, where's the upside? Or, or where's the utility? And, and where's all the products and services that were supposed to be built here? But at the same time, like, you know, zooming out this, I, I've said it for like the last, I think, 18 months already. This has kind of been like Bitcoin summer, you know, like bitcoin has become the main thing again. And I think that's important for the industry in general because it is the preeminent cryptocurrency. You know, it's, it serves the three functions of, of hard money, which is fantastic and, you know, hopefully we can have a better payments experience. But I also, I've worked at cointelegraph long enough now that I'm fairly agnostic when it comes to everything. I have an open mind. I think there's a lot of great technologists that have built great blockchain protocols that have some good use cases. You know, I don't, I tend, I try not to focus on token prices and stuff like that because I'm not really a trader, but obviously that drives a Lot of sentiment. It drives investment. But overall I don't think anyone's been super negative. And yeah, like, if you forget about everything that's happened with the tariffs in the last 10 days, you could argue that this has been the most fantastic six months for this industry that we've had in a pretty long time. And man, we bitcoin just hit 100k like 3 months ago. So people need to just zoom out a little bit and be a bit more thoughtful about everything that's happening. And different protocols are doing different things. Ripple launched a stablecoin last year. Everyone's trying different things, they're using their chains for different things. There's definitely innovation happening across the board. Your token might not be at the price you want it to be. And Ethereum people are very concerned about what's happening there. And we've had some really interesting conversations. Like I spoke to Sandeep Nalwal from Polygon a couple of weeks ago on our X space and he was kind of saying that, yeah, like everyone's moving in the right direction and he's still very convicted about what Ethereum is. But there needs to be some pace to what they're doing. They need to move quickly to bring things back together, you know, do some chain abstraction, you know, like make things a lot more seamless and a lot less disjointed than they currently are. But for the most part I can't complain and I'm pretty excited about where the industry is going. And yeah, it's Paris. Blockchain's been good. I'm looking forward to Bitcoin 2025 in a couple of weeks time. Token 2049 is going to be, I think, really, really big in Dubai in three weeks time and we'll be there. I hope you'll be there, Scott and everyone else on the, on the stage here.
- [43:31]
Scott
Today I'm supposed to host an award show, but I'm still deciding whether to go or not. The ROI for conferences for me with the travel and kids and stuff has become so diminished that it takes a lot to get me off my couch. But yeah, I'm theoretically maybe planning to be there. I mean, Noah, you were throwing up a lot of emojis and thumbs up and hundreds when Gareth was talking. I mean, is that generally the view that you take? I mean, I think it's worth hearing kind of our last 15 minutes pivoting to the altcoin market and people's thoughts there.
- [44:02]
Noah
Yeah, sure. I, I think that the reason Altcoins utility tokens didn't pump is because people recognize that they're just memes, most of them, not all of them. Garrett made some great points. There are some incredible protocols that have been built over the last three years. You can name them I think, on maybe one, if not two hands total. And the rest of it is just vaporware, empty promises. Utility tokens that don't really provide any sort of utility. They don't really tie into the ecosystem. The token issuance schedules are predatory and they're meant to kind of allow the founders and the early investors to milk kols. And maybe if it gets to retail, retail and the rest of it is just kind of flat as the protocol claims they're building. We've seen this over and over. The reason memes were so popular was because they just stripped away all that nonsense, right? They said, this is what it is. It's gambling, it's a casino. It does nothing. It's fun, it's culture, it's community. And number goes up a lot faster than it does with these utility tokens where you have to buy and hold them for an entire cycle. Right? You have Solana and applications like Photon and Pump Fund that have made blockchain trading feel like it's as fast as the Internet. And that's something you just don't get on the evm. So people say that we didn't have a bull market and there was no alt season. And there was an alt season, there was a massive alt tease. And it just didn't happen on Ethereum, it happened on Solana. And people thought that they could use the same old playbook, right? Buy mid low cap alts, utility alts quote unquote, and then dump them on retail. But it's just, it's different this time. And so if you're allocated to bitcoin, you're doing great. I'm really happy that I bought bitcoin over the years. I wish I bought more. Really? Yeah. Right. So, I mean, that's my general thoughts around the market are that bitcoin and stablecoins have found product market fit and they're actually making a difference out there. And everything else is getting there.
- [46:11]
Dave
Right?
- [46:11]
Noah
Defy, I think, is getting there. Gaming is getting there. Gaming, I think, has a lot of potential, but it's not there yet. RWAs, I think, are getting there. And you know, I. I think on a very positive note, soon we will get a lot of the things that we were promised back in 2017, 2016. I do think there's light at the end of the tunnel. But the vast majority of the stuff out there right now does nothing. And it's meant to extract value, just like memes are. I really find no difference between the quote unquote utility tokens and meme coins. I think they're the same.
- [46:46]
Scott
Oh, the speed. The speed at which the extraction happens.
- [46:51]
Dave
Exactly.
- [46:52]
Noah
Exactly the speed.
- [46:53]
Scott
Right.
- [46:54]
Noah
And the speed as well. So if you want to. If you want to dump on retail, then you just switch to memes and you have to be at your computer and make sure you dump within a week, as opposed to wait an entire cycle. I don't know.
- [47:07]
Scott
Or an hour.
- [47:07]
Gareth
Yeah, sure.
- [47:08]
Noah
Or an hour.
- [47:08]
Scott
Or an hour.
- [47:09]
Noah
Exactly.
- [47:11]
Scott
Lawyer, you've been the strong silent type again today. This conversation's in your wheelhouse. What do you think?
- [47:18]
Lawyer
Yeah, I mean, I don't know if this feels like we're just in, like people were saying before, it's time to accumulate. I've been buying, you know, I'm not going that heavy. I don't know exactly where we're going to go in the short term, but I still feel like I'm old enough to remember when we were like 20k bitcoin heading to zero. And now we have absolute confirmation that it's real. We have. Things are very messy up in the air, but in a sort of controlled chaos, the orchestrator of all this knows exactly how to fix it. So I think it's a great time to sort of bunker down and find the coins you want to buy. I bought a big bag of near yesterday. There's so many great crypto projects that you know will be around in a couple years that I think this is like a. A godsend buying opportunity. If you were already deep in, then you wait, and if you were not, then great. Buy something.
- [48:09]
Scott
Perfect. I think we've covered everything today. Move on and be back tomorrow. Hopefully I won't be here tomorrow, but likely the show will continue to go on. We'll figure that out. But give everybody on stage a follow and check out Crypto Town hall every Single day here. 10:15am Eastern Standard Time. Thank you, guys. Gareth, I'm looking forward to more reporting back from Paris. I'm trying to decide if it's going to be a FOMO or a productive decision.
- [48:41]
Gareth
Probably a productive decision, but it depends how you value things.
- [48:46]
Scott
I'm interviewing. I'm interviewing Dana White tomorrow in Miami.
- [48:49]
Gareth
Okay, well, then you've made a fantastic decision.
- [48:52]
Scott
Okay, I'll take it. All right, guys, thank you very much. We'll see you all tomorrow. And the rest of the week. Have a good one.
- [48:58]
Joe
Bye.