C (2:47)

So yeah, so I mean, you know, people are like, look it, I hate to say it for those who don't know. I ran a very large market maker that took the other side of retail trades. Retail is not stupid all the time, but on market extremes, retail is unbelievably dumb. And so the single most, if you want to look at the top, you know, whatever n number of days of profitability for market makers, they're always on days when there's capitulation lows or, or euphoric highs. Why? Because they get to widen the spread because retail will sell at any price and when spreads widen, that's great for market makers. And literally that's what we saw yesterday. So it, it, it is exactly that. The as, as I've said to you many times, Scott, I think that, you know, the argument that we're living in a simulation is backed by things that it happened to be right at the 50 day, you know, moving average, you know, the one that, that the price level that you always like point at. And what do we do? We, we sliced through it briefly but closed above it and here we are. So, you know, look, the most important thing to understand is there's a value transfer going on. The, the fiat markets are doing what they're doing. Bitcoin has had literally only positive news on the fundamental side all year and that keeps accelerating and yet.

D (4:13)

It leads.

C (4:14)

The market up, it leads the market down. We haven't experienced anything compared to what a normal quote cycle would be. And what will occur in my humble estimation is that having won the three elections they wanted to win, the Democrats will say, because they think there were a lot of Democratic strategists that said that the shutdown will help them in New York, New Jersey, Virginia, actually four elections. California, Prop 50 will help them in those jurisdictions. And now that that's done, they don't have any political reason to keep it going because the rest of the country actually blames them. So I suspect you're going to see a resolution over the next week, which means the fiat printer gets turned back on and all of a sudden people are going to be ignoring what happened over, you know, this week as we go into the end of the year. Now that sounds awfully bullish. I'm sorry for that, but I get much more bullish when everyone is bearish. If everyone was like this, I'D be, I'd be the opposite. So anyway, that's my thoughts for this morning. Don't know what other people keep. See Andre, I see you throwing the hundred percent up. So you probably agree, what do you think?

E (5:22)

Yes, Good morning. Totally agree. You mentioned washout. I also think we've seen a washout yesterday based on for instance short term holder realized losses. Right. They've spiked to the highest level since April 25th. So since essentially the, the tariff shock, I think they realized that around half a billion in, in losses yesterday.

F (5:45)

Right.

E (5:46)

You mentioned the ETF flows. I mean they tend to cycle with, with sentiment as well.

F (5:51)

Right.

E (5:51)

We had like half a billion in net outflows from your spot. Bitcoin ETFs also in line with like catastrophic sentiment. We've mentioned like sentiment being bearish essentially since 10th of October. Right. But I think what's quite striking is you, at least in, in our crypto as a sentiment index, you can see there's a bearish divergence. And what it means is a bullish divergence. Sorry, so. And what it means is you're actually approaching the point of max seller extortion.

C (6:25)

Right.

E (6:26)

So where there essentially no sellers left. Right. There will always be sellers left at some point. Especially if like long term holders start selling into losses. Right. And we've seen some of this, but usually, I mean we've just seen short term holders relying, realizing losses. So far we've seen extreme fear and so on. But yeah, this bullish, bullish divergence is quite remarkable. But I think like in the grand scheme of things, I mean we had a drawdown of minus 21 so far. Right. From peak to trough. I mean it's in line with like the standard bull market correction. I think in terms of duration it's been around 25 days so far, so approximately a month. I think previous bull market corrections have seen around 60 days in average duration. So yeah, I think so in terms of like the duration we could continue to consolidate. But I think in terms of the depth of the drawdown, it's totally in line with like previous bull market corrections.

B (7:30)

This is the fifth time since the 17k low in 2022 that we've had a 20 to 23 drawdown. Fifth time and there were two that were bigger. 34 and like 37, something like that. And we've done it to above 100k and people are losing their minds.

E (7:48)

Exactly. I mean what's also interesting to talk about is why has there been a sell off in the first place?

F (7:55)

Right.

E (7:56)

But I think like my thesis is probably similar to Arthur Hayes thesis, right. He said you had this increase in the tga, right. You had a decline in liquidity. You saw this in this sulfur fed funds rate spread, right. Which widened to year to date highs because of liquidity issues. And so the NASDAQ went down. It wasn't, it was like a general risk off also in US equities I think that propagated into crypto assets. It was like it wasn't originating in crypto markets I think. I mean you had this dpac, right, an X USD but I think apart from this I think was like a more general risk off. But I'm happy to hear your thoughts.

C (8:44)

Yeah, I think it's important to understand that October 10th can't be understated. But as is typical with markets, the impact of October 10th I think has been exaggerated and we'll see, we'll see what happens next. So what I mean by that is you know we talked about it yesterday. The you know the people who made money and it was a lot of money were the ones who are short biased who think they're the cycle. The people, the people who believe in the four year cycle saying that Bitcoin should go down to 50,000 or whatever and you know, who knows, I mean anything can happen I suppose. But the truth is that there's a lot of that. And so they had the ability to sell and the people who were generally the long ones got wiped out and got crushed and altcoins have sustained serious damage. So you know the, the real question was is is are there any major for selling events that were triggered by that like Luna did. And the answer seems to be no. And if the answer is and even.

B (9:44)

If there was and we're above 100k. Well okay, if that doesn't make you.

G (9:47)

Bullish I can tell you that from the mining side there's a, a lot more pain in the markets.

B (9:57)

And so there's transparently.

G (9:59)

Exactly. Yeah. So you're getting a lot of bigger who were you know previously hoddle at all cost Fundamentalists are now starting to looks to be flocking to liquidity just because hash price is really low, difficulty is really high. There aren't any new mind blowingly efficient machines coming to the market however. So that's that trend will continue. However the good news is due to the having over time minor cell pressure by design goes down. So I think that might be midterm the strategy miners just continuing to sell off for liquidity purposes. But after the next having there won't be any cell pressure remaining because they can't mine as much.

C (10:47)

Can I ask you a question Marshall? It feels like what's going on in the mining market is a lot of sovereigns who really are much less price sensitive whether they can make money or not are competing with miners that are purely capitalistic and as a result hash rate just continues to stay as you said, persistently high with high difficulty. Is that completely naive? Am I crazy for thinking that? But that's what it feels like but I'm not on the ground.

G (11:16)

Yeah there's been an influx of nation state actors. I'll give you a good example. The Jordanian government just put out a rfp. There's a lot of Middle Eastern countries that have surplus power with nowhere to send that power. So that's a good example. Iran's been doing that for a while. I would estimate that percentage of the market to be around 15% maybe a little bit less and it's growing but it's not growing as quickly as the public miners are growing their hash rate so I think today it is maybe 15% over the next five years it could be 30%. The bigger reason is people are retrofitting their older machines for the newer machines and there's also a growing mid market so people who are less sensitive to price they might not have massive scale but they have massive geographic footprint in the mid market for mining that's not public companies seems to be growing. I personally fall in that category Ryan falls into that category where we're attracted to like for instance I have 8 mines in Nigeria and it's all effectively more or less free power and that'll continue to grow. So there's a few moving pieces there. I think today the sovereign actors about 15% over the next five years that will grow.

C (12:51)

Thanks. I just think it's interesting but if we get back to the market Scott I mean the other obvious thing that's going on is if you look and yeah it's true futures premiums know just on the CME are distinctly lower and you know have stayed there. There's, there's like no, you know there's just not. There's just not a lot of. There's no technical indicators I see which.

B (13:16)

Show you're saying it's in contango like where there's still futures are trading at a premium.

C (13:21)

Well of course they're at a premium but they're lower premium than it has been with interest rates being where about per.

B (13:27)

I haven't looked at per funding rates.

C (13:29)

Is there anything There they still suck and you know, they still are in my mind bullish because. But they've been the whole time. I mean basically nobody is paying a lot to be long, right? It hasn't been that way. That doesn't mean that on hyper liquid other places people aren't still, you know, pushing themselves to high levels of leverage. They just don't have to pay a lot for it. So, you know, whatever. But you know, it's also interesting if you look, despite what we just went through, if you look at Bitbo on the volatility, the 30 and 60 day volatility predictions, it's risen almost, not quite, almost to the middle of the recent range and still well below historical averages, which is, which is interesting as well. It's telling you that as volatile as we think it's been, it really hasn't been. And that's kind of, and that's. This is the first time that people in the ETF world are starting to see it creep up to where you know, a 20% move, you know, to bitcoiners it's like okay, big deal, but, but to that, but to etf, you know, holders. Yeah, those sorts of moves are, are sizable. And then, and we'll see, we'll see how they react. My suspicion is they'll take it in stride because most of them don't really care. I think yesterday was the crescendo sell anyway. I see Ryan as his hand up.

A (14:43)

Yeah, Dave, I completely agree and I've been saying this for a while when we started seeing ETFs come out and I'm like, well, welcome to the party. A lot of the bitcoiners have been here for a long time and we know the back to, back to back 20% losses each day. I'm just waiting till the day that that happens over a weekend and then people wake up Monday morning and they realize that 40% of their wealth has gone from their position. So yeah, it's going to be very interesting, but we're used to it by now. Yeah, Ajit.

H (15:22)

So you know, anybody looking at bitcoin being substantially higher, let's say 150 or more in the next several months, I would not disagree with. However, I also do not think this was the last shakedown. What I have found. Shakeout. What I have found is that when such shakeouts occur, everybody who has made only a little loss because they entered at a price just a little higher than this and as well as somebody who is actually sitting on profit and did not act in panic is still on the edge. So if we see a rapid move down of price even from the present 103 to let's say 101 or 100, that is likely to trigger one more retail panic. So when a retail panic occurs, we are sitting on vibrating ground and there can be another volcano. So unless we are at least a week away from this, I expect that within the next day or two we could see a sharp fall again below 100.

B (16:22)

I mean, it's definitely possible. We were there like 12 hours ago. So I don't disagree that that's possible. I think we could get a much lower drop and then a big bounce. Right. But it is, it is encouraging, I think when you test the liquidity below a level like that to see at least a reaction and not a deep push through.

I (16:40)

Right.

B (16:40)

So, yeah, bottoming is not necessarily a price. I think we're bottoming, which is sort of a process that. Dave, that's my opinion.

F (16:47)

I see.

C (16:48)

Well, you, you know, you know, I agree with that. I've been saying it for years. Bottoms are, are processes and frankly, so are tops often. But you know, the, the difference is, is when a, when you get a crescendo after a process has been in place and it happens to be at the bottom of a range and it starts to hold there. And if, if, if I'm right and they resolve the government shutdown in the next day or two, which I suspect is going to happen. I, I know that's also contrarian very well.

B (17:18)

Poly Market disagrees. Right.

C (17:20)

Well, the problem, the pro, the problem is polymark is really good when people are voting on what they understand. I mean, what the issue is. The Democrats had a very specific agenda here. And you have to, you have to know that, I mean, they, there were multiple states where, if you look at the polls, where the people blame the, blame the president, they blame Trump for the shutdown. Right. Those states, New York, New Jersey, California, Virginia, you know, Massachusetts, blah, blah, blah, blah, blah. Where were their major elections? Well, it was in those states. Okay, those are done now. Now the rest of the country is the other way and they don't want to lose ground everywhere else, so they're not going to let it go to past Thanksgiving. And when that ends, we'll see what happens with SOFR and the liquidity situation. But one way or another, I think the printer goes back on and I think it goes on in a big way, but we'll see anyway. There are four different hands up, so I saw Amateo first, but I don't know. Who did you see first?

B (18:19)

I only see Amateo, so Godspeed, my friend.

C (18:21)

Oh, well, also there's also. It goes out Ryan and David and a hand up, but he just talked, so that may be a shadow.

B (18:28)

Amateo, I think you're up.

F (18:31)

All right.

B (18:32)

All right.

F (18:32)

Hey guys. Yeah, I mean, what kind of interesting conditions we find ourselves in. Harking back to my previous statement, I said on spaces, which is the government can stay shut down longer than you can stay solvent. I think we're seeing maybe the very final tailwind of that where instability has started to sort of cascade and finally sort of catch up into markets. I just think there's a lot of fear, a lot of instability. But I also think that there's some interesting things that are happening within the market. Specifically, you know, the majority of alts have just been absolutely crushed and decimated. But, and I know that this has been talked about, but like there's definitely been some outperformers. Zcash has been insane. The privacy narrative is starting to affect other altcoins and we're also seeing a trend where some of these more dino altcoins, where the majority of the supply is already in circulation and the use cases have been established, are starting to catch some bids. So I don't know if this was well sustained, but many of these were able to perform better than Bitcoin in terms of the drawdown in the last couple days, which was pretty surprising, or they're just rebounding faster. So I'm not exactly sure what this is signaling, but there's definitely a signal here. And if we were to look at like the sort of larger rotation possibility, I think we're getting some signals that once we get through these risk off conditions and liquidity comes back, we start to see where, where all of this stuff is headed. I don't think it's over, frankly.

B (20:32)

There's a liquidity pause.

F (20:35)

Yeah, yeah, exactly. It's a liquidity pause. It's also renewed interest in some stuff that's literally been laying dormant for three years. I mean, that's not insignificant to all the projects and all the tokens in the space, but I also think what it's signaling is a sort of return to who's been building during this period of time. Where is. Where are there tokens that are in supply and you're not going to get just dumped on by like huge VC lockups. It looks like it's a smarter utility driven investment game in this current environment. And I expect that to continue and that's exactly the market conditions that I think anyone who's not just a pure Maxi has been hoping to see as the meme coin madness iced over and hell half be done. But yeah, honestly I actually think it's really promising setting up for risk on conditions that people are starting to position properly for in the way we would all hope.

B (21:38)

And there's some crazy announcements of late like when you talk about utility. So I'm scrolling down my my feed. One of them was Chain Link's announcement with Denarii. I don't want to misquote it. Denari Partners with Chain Link to Tokenize S P DJI Digital Markets 50 Index. I don't know if you guys saw this, but ripple raised 500 million at a 40 billion valuation in round led by Fortress Investments Group and Citadel securities. I mean, 40 billion. There's a lot. These are huge announcements.

C (22:14)

I mean we could, we, we could keep going through that. I mean the real question is, and it's funny with Ripple swell going on.

B (22:19)

You'Re going to do the Ripple XRP thing, but yeah, go ahead.

C (22:22)

Right. Well, I mean Ripple building a prime broker that is that, that has all the components, you know, with the hidden road and their custodial and now, you know, payments and et cetera all makes an enormous amount of sense and requires a lot of. Sorry, I'm gonna have to jump and grab this but requires a lot of capital. Anyway, I think I saw Ryan next.

B (22:43)

Ryan, I can't see hands up so. Right, yeah, go ahead Ryan.

A (22:50)

And my hand up was a while ago but I'll jump in on this. I, I really hope we're past our DJ Gambler phase and everyone's looking at functionality in these projects. I still don't know a lot of serious use cases for Bitcoin other than buy and hold. I know there's a lot of layered twos that are trying to get in there like stacks. But hopefully we moved into the realm of functionality investing rather than just full on speculation and degen. But I'm not convinced. Maybe it's just a reprieve.

B (23:29)

Anyone else can jump in because I do not see any hands and I see half of you as listeners. So if we're not calling on you, probably not our fault.

C (23:39)

Cool.

B (23:39)

Well, Dave, are you still here? You had to run. We can move on to other topics. If not, I mean, I think it is. Go ahead, David.

D (23:48)

We can talk to the other Dave.

B (23:50)

Me Double Dave. Go ahead, buddy. I didn't. I saw you as a listener but you did just appear as A speaker when you came up.

D (23:56)

Hey, but we're back now. Yeah, we've all done our routines around crypto of sort of like picking ourselves, shaking up the dust, checking for our wallet, our spectacles, our testicles and our glasses. But, you know, I can just say, personally, I got out of Bitcoin around 110. I'm interested in buying back below 100. Didn't move fast enough yesterday. I think probably the most positive thing we could see for crypto right now would. Yeah, be get the government back in session to actually make forward progress on the Clarity, on the Clarity Act. But, you know, if I'm looking at Poly Market right now, which is putting a 61% chance that, you know, government doesn't reopen until after November 12, you know, unless we get some leeway or, you know, headway on keeping the Affordable Care act in place, you're probably not going to see the Democrats want to come back. So, yeah, the election may have been won, they may have been won in Democratic leaning states, but I think an issue still stands out there that's fairly significant to the lower end of the socioeconomic income distribution, namely healthcare. And I think that that's a big issue and we really haven't gotten over that hump yet. So I'd love to see the Clarity act passed. I don't think we're going to get anything done before we get health care resolved.

B (25:19)

Congressmen and congresswomen, senators, they all get their paychecks, right?

C (25:22)

Yeah. I mean, look it, there's all these paper tiger issues and it always makes me sad when people fall for them. I mean, the, the, the amount of, they've conflated many of these issues and bundled them together. But, you know, at the end of the day, shutting down the entire government over a, over particular pieces or trying to spend, I mean, there's very little doubt that it's not going to go. I mean, Trump may think he's going to win totally, but I think that the elections are going to have scared them a little bit, they're going to be willing to compromise a little, but they're not going to give in on the illegal alien stuff. You know, funding health care. That's not going to happen. But what will probably happen is there will be ACA subsidies of some sort, but they just want to get the damn thing open again. This whole thing is getting people pretty pissed off and the political calculus has changed, and you just need to understand that, I mean, look, it's not going to go on forever. The other big thing to watch, though, that we haven't talked about, Scott, is gold. You know, people looking at. At the gold price. Remember, you know, when gold went to, you know, started flying way past to.

B (26:29)

What did it hit?

C (26:30)

4, 400.

B (26:31)

It was 44. What is it today?

E (26:32)

38.

B (26:33)

So I hadn't even looked.

C (26:34)

No, no, it's. It's. It's. It's basically, where are we right now? We're 39.85. It's just. It's floating again. And what did we say? We said there's this hot ball of money that propelled gold from the mid-3000s to the mid-4000s, and that the most. The best setup for bitcoin would be for gold to establish to get itself back into a range and get boring again. And the longer it stays right around 4,000, the more likely it is that hot ball of money will look at yesterday and today as a buying opportunity and momentum tends to feed. So we'll see. I do think that, that people who think gold's going to drop down into the low 3 thousands are going to be disappointed because they're not taking into account either geopolitics or money printing. And people who think that's going to fly up again immediately don't really understand how ranges work, Just like we've lived with ranges in bitcoin. And I think that gold is going to be in a range for a little while, and that's also very constructive for bitcoin. So it's just worth looking at that. But, you know, we'll see. Honestly, we'll be talking about it for a few weeks. I'd say by December, we'll have a pretty good idea. I can't see any hands before. I mean. Oh, there's Jeff. Jeff, go.

I (27:53)

Hey, guys. Yeah, thanks for having me on. Yeah, I'm just looking at the sort of the relative strength index on bitcoin, and we don't seem to be at anywhere near the euphoric levels that we saw sort of back in the bull markets of 2017, 2021, where we sort of 80, 85 on the relative strength. We're currently sitting at around sort of 55, 60 at the moment. So, yeah, I don't think we're. We're anywhere near the euphoric levels. And I don't know if anybody sort of monitors the stock to flow sort of model that's seems to be an interesting model that's currently forecasting like 500k at the moment. So that's like super bullish. But I think I'm Sort of moving towards sort of a different model, sort of more statistical mod at the moment. One of in particular that's interested me recently is the, the bitcoin quantile model. I don't know if anybody's seen that by, by Plan C I think is the guy who created that.

A (28:51)

Yeah.

I (28:52)

And that's sort of forecasting anything up to 316k at the moment for next month. Looking at the 99.9% percentile which was the peak of sort of last bull cycles between 99 and 99.9%. So that could be anything from 260k to 320k right now for next month.

B (29:16)

So at the end of the year.

I (29:19)

What's, what's that?

B (29:20)

Sorry, I said by the end of the year, I'm asking. No, that's my next month.

C (29:26)

By the end of the day.

B (29:27)

As a betting man, I'll just take the other side of that no matter what anybody's model says. But if it's time based I'll, I would with everything.

I (29:35)

Yeah, but even a worst case scenario, I mean down to the.

A (29:38)

And then I'll be right.

B (29:39)

And they can go there on December 2nd and I'll make all the money on my bitcoin and still be right on my bed.

I (29:45)

Sounds good to me.

B (29:47)

To me there's just nothing more ridiculous than a very specific time framed like massive price prediction. Like if you're right, I guess you look like a hero. But every bitcoin model I've ever seen and I find them all impressive. And I actually really like plan C but like they're all great until they're not. And I remember, you know, I've had plan B on a number of times. I count him as a friend but like stock to flow, he was the hero of the entire cycle until it broke down. And then you realize that, you know, it's easy to be a genius in a bull market.

C (30:17)

So yeah, that's why I quite like.

I (30:19)

The bitcoin quantile model. It seems to be a bit more statistical. It doesn't just go for one sort of number, it gives you a range of quantiles. So at the moment we're looking anything from 50k to 320k. I mean I know it's a large.

B (30:32)

Range but that's a hell of a model.

D (30:35)

Yeah.

B (30:37)

Hey, can I be that good at my job and get paid? Oh my God. Guys, I have a prediction for Ethereum. It's gonna be between 0 and 10,000 this month.

A (30:44)

Yeah, I think these are the same models they use for Covid numbers.

C (30:48)

Yeah. I mean, the problem with all these models are, you know, if you base your model based upon fractals or patterns of, of things and you don't take into account what's actually happening in terms of adoption, you have it. It's just, it's going to be wrong. And it always works that way. Okay, we, we got, we got a bunch of people willing to talk about this. So, you know, I think Ryan was next.

G (31:15)

You.

A (31:17)

Yeah, I'll just throw in on the model thing because every single time I've heard someone say 300, 500, you know, a million. To me, that's always a sell signal when everyone, especially this time of year for whatever November, December, when anyone tells me that it's going to double or triple or whatever by the end of the year and whatever months, I'm like, we've topped, we're done and I'm out. This. I've gotten caught on the hype for several years in a row a while back and it, it was painful. So now anytime I hear someone saying numbers like that, I'm like, okay, I think we're pretty close to being done.

B (31:58)

It's your miner to start running AI.

A (32:01)

Exactly. But what I started doing is for forward casting price based on what miners need to be solvent. And I've been doing this for years. So I knew what the mining target for Hut 8 and rhodium and all these different guys were years ago going into the happening. So I knew that the price had to be at least 66,000 going to happening. Otherwise they wouldn't be, you know, they wouldn't be in business. So I'm like, okay, so that's my price target. I started forward calculating based on network difficulty increases years in advance. September by September. So September 2025, September 26, September 2027. And so far my model has actually been pretty good. Tracing pretty well. So my top in September 2025 was 125, 126. And that was like a highly optimistic top. My top for 2026, September, optimistic top is 190. And that's like extremely optimistic. More realistic optimism is around 150. So anytime someone's saying 300, 500, whatever, I hope they're right because hey, like that's great for me either way. But I just, it's not, it's not in the profitability.

B (33:23)

You know, people will be like, why are you so bearish? And if you're sitting at 100 and we're at 150 in 11 or 10 or 11 months and go up 50%. That's pretty good like annual growth.

C (33:34)

Yeah, it's amazing and people always forget forget that you know even the, the most ardent bitcoiners who like me believe that the, the ultimate target ultimate but the, the first real target is somewhere in the, in the 10x range from here. You know to be digital gold in, in, you know in, in $2025. It's not getting there in, in a straight line that just, just, just not the nature of of these things. I mean the most optimistic model I is the adoption s curve one that Bastian Sinclair talks about and which is really more based on tech. That's the most optimistic one and in that, in his yeah there will be some tipping point where it accelerates very rapidly. You know even in a sense similar to how Nvidia had its real serious growth. But I mean most people don't expect that because it's just not the way the world works. You know there's still a lot of people who held Bitcoin from 100 bucks or 10 bucks or whatever that are going to cash out along the way. There's price elasticity. We know that you know, you know to you know to a lot of people even the ones who are completely are full believers. Anyway I think I saw Amateo next and then Jeff.

F (34:51)

Yeah, great analysis Ryan. That was really fascinating. So, so thank you for that share. Minor cost makes it super obvious from an analysis perspective We've been doing to be a little bit self referential for a second some AI modeling on basically chart based data. So we've been pulling in data on 100,000 plus assets and basically piping this all into AI models that can reference prices, charts, volumes, RSI, MACD et cetera where it's basically using an AI model to do the analysis of TradingView and other proprietary trading data. And the one thing that we've realized is just the way that the model has to constantly be taking in fresh data because markets are so chaotic to actually get a clear analysis. And this isn't long term view this is trading based perspectives intraday swings positional but it's just been really fascinating and I almost never shill on this spaces but check us out at Gopher if you're interested in using it's like chat GPT but for trading and it's a really fascinating tool and apologize for being promotional but it gives you some really amazing insights and can prevent liquidation measures. Just wanted to mention it is now Scott, I'll give you all the credit.

B (36:26)

If we kill all the golfers or. Okay, anyways, anyone who hasn't seen Caddyshack, Bill Murray, sorry, go for golfer. Yeah, so, I mean, models are great. I just think that you end up looking stupid if you create one and publicly share it, especially if it has a massively hyperbolic target in the very short term. That's all. I hope right there would be like Brian said, I mean, what, what would be better than like $300,000 bitcoin by Thanksgiving? That'd be amazing. Not gonna happen. Not gonna happen. Dave, do we have any other topics on the, on the docket today? I'm. They gotta check the. Check the news.

C (37:06)

Well, I mean, I think that. Yeah, I mean we've talked about the obvious news are the elections yesterday and we talked about that and you know, what's going on in the markets and we're talking about that. But I still see three different hands up. I mean.

B (37:17)

Oh, I didn't see them. So I tried to move on and.

C (37:20)

I. Yeah, I don't know if I'm right. I mean, I see.

B (37:22)

No, you got to be right. Better, better odds of the actual hands being there than not being there. Who has their hands up?

C (37:27)

I had Ryan and Jeff. Either you guys, is it shadow hands? Is this, this X glitching again or you guys.

A (37:37)

That, that was a, that was a glitch.

B (37:39)

Are they scissor hands?

I (37:40)

Shadow hands for me?

D (37:42)

Yeah.

C (37:42)

I'm going to tell you as well. Yeah, it's. They gotta love this platform. I mean, Scott, I thought you were going to get the three developers at X to actually start fixing it.

B (37:53)

They're not returning my calls for some reason. Maybe because I've been so hypercritical they're not employed anymore.

A (37:59)

Yeah, I, I will. Sorry. Say that I find it fascinating the more uses of chat, GBT and these AI to generate trading models. I went down this rabbit hole and every single model I came up with and it sounded really good and every single time I came up with a trading algorithm that I came across where someone was claiming great returns, or we use this model, that model, and I'd lose like 90% of my holdings within 10 months. AI doesn't seem to have cracked the code on a lot of these trading, but if someone does have it, they're probably not publishing it, so. Well, it's going to speed up.

C (38:39)

Yeah. Speaking from lots of experience, having run, you know, quant teams for a decade, I'll tell you a couple things. First of all, most of the models that, that, that you base upon indicators that we all talk about are all in context, out of context. So I'll give, I'll give a quick story. So we had a model, it worked extremely well and one of the things that, and it was, it was based on, on covariance of, of of stocks, not pairs trading but clusters of stocks to other stocks. And it, it was you know, generally market neutral etc and it, it, it did extremely well. What we learned relatively early was that the, that, that, that there was a sweet spot. When the signal gets strong, it's good. When it gets very strong, it's bad. Now what do I mean by that? I mean when a s, when a, a market signal gets extremely strong, generally there's a reason for it to be and it means that it's invalidated and that is exceedingly difficult for AIs to deal with because you, they're very, what's the word? Episodic. So you don't get to the statistical significance to understand that. And so unless you know how to prompt and build models that understand you know what, when the strength of signal is there, how, you know, how do you, size positions, etc, unless it's truly multivariate, it's really difficult. Most of the simple models that people do based on indicators fail. Now here, here's the, here's the real funny part. The real funny part is when you get a lot of AI models and a lot of people doing the same thing, you end up with a situation that we call the crowded trade philosophy. And the crowded trade, the biggest example of that in quant history, believe it or not, was August of 2007. And most people here have absolutely no idea what the hell I'm talking about. They called it the quant quake. And what you ended up with was enormous numbers of people with the same sort of fundamental value model and one that Goldman Sachs happened to been looking after, went kaboom and it dragged everybody else down with it. And you saw, you know, multi standard deviation moves to the point that it seemed impossible. Literally the quant, my, my headquarter on that model, which I had shrunken because I didn't believe it, because it felt wrong for a lot of reasons, told me that the move we experienced in our portfolio was a six standard deviation move. Now to put that in perspective, that's about the same probability of a meteor hitting our building and, and me living through it. You know, it's just, it's the kind of thing that can't happen. But the reason is because statistics don't understand crowded trades. So you have a lot of AI models all looking at the same data and a lot of people using them. You're going to get very crowded trades and that's why your 90 thing happens. It's because the models are all doing the same thing every other model does and when it goes wrong, boom, you know, it underperforms. So sorry for the deviation but you, you mentioned it's one of my, my favorite topics to talk about with people because they don't generally understand it.

A (41:43)

No, you're so right. That's exactly what I saw when I kept modeling out these algorithms. In fact, even the AI chat dialogue I had going, kept going back to. You would have better off just buying and holding Bitcoin. You would have been better off just buying and holding. And the only algorithm I found like simplistic algorithm I found actually turn a better profit than just buying and holding was selling at a 7% upswing and then buying back at a 1% down. And I back traded that like six years and that was the only thing that outperformed just buying and holding. So. And it wasn't even by that much.

C (42:22)

Right. And so that's why you know, you know not to, not to shill a company that I don't get anything for shilling, but not, not to shill. But that's why systems like Arch Public which give you the ability to build very simple models that make sense and that tend to do very well in as long as volatility patterns stay the same. But more importantly doesn't over trade. That's why those do tend to work. But those are not get rich quick models. Right. You know, those are steady accumulation sorts of models and, and that's different. You know, it's. So if you're, if you're going to be dcaing, you can use quantitative techniques to DCA better. Right. But that's not the same thing as what you're talking about. That makes sense.

A (43:04)

And that's, that's what I landed on where. Yeah, I have a model running now on one of my servers that is going to probably trade about 10 times a year if that. It's just a goal to sit terms. So yeah, it's gonna be interesting. Exactly what you said. We're more and more using AI to generate trading algorithms. Crowded are the trades gonna. It's gonna be very interesting.

C (43:31)

Yep.

B (43:33)

The algos will just trade against the algos with no humans and they'll all just take the same trade and then no, everybody get liquidated to zero. I'm just kidding.

C (43:42)

You know, you know what's funny about that Scott. A lot of people have been saying that for 25 years and, and, but it completely ignores the fact that humans like to, human people like to gamble, you know, all over the place in, in so many different vectors. And so I think if anything is more of it, I mean Poly Market and, and Calci are a perfect example of that. Right. So you know, we'll see. Anyway, I think Mark is.

B (44:05)

They're gonna gamify everything. Mark had his hand up. But the prediction markets are the beginning of the, of the trend of gambling. Not even the end now that you know.

C (44:15)

Absolutely. Right.

B (44:16)

Yeah, go ahead Mark.

J (44:17)

Yeah, you're totally going to have to get a new space for the gamification and, and the fallout that's going to come from the dopamine overdrive that's hitting more and more people through Robinhood and all that. When you guys were talking about the crowded trades later in my career when I went to Credit Suisse from the hedge fund side, that's all I did was aggregate data and prevent it. And David, you're talking about the six standard deviation moves. The reason why these spaces are good because when we have these times when odd things are happening, it's basically it's not in the data. The crowded trade is new, it's very front loaded, it's not in the historical data. And that's why the data says well it can happen because based on the look back you would have to, you know, need more time. But crowded trades compress it. They jam everybody in and you know, it's, it's like being on trampoline alone feels good but if you don't realize two or three people come in you can get triple bounced the fuck out into the neighbor's yard. And that's what happens during the crowded trades. A bunch of guys creep on your trampoline, you don't know it and they basically add gearing and risk that isn't otherwise incorporated into the algo. So that still remains a huge component and the biggest alpha drop I think on the call with Scott earlier just reminding us we've had five since 2022 of these moves and this isn't even the biggest and I believe in the.

B (45:52)

Previous cycle this down to seven that are over 20.

J (45:55)

Yeah, thank you. Now going back, aren't there seven or eight, 30 or 25 drawdowns? Yeah.

B (46:03)

Okay. These have been shallow. Like we, you know, like we will forget like we talk about 2021 as the most bullish year for crypto. We went to 65 back to 28, back to 69. Yeah, I think we went from 65 to 28 in 15 days, maybe less.

C (46:20)

Right. And it's also very important to remember that during that, with that backdrop, with all that crazy volatility, the exuberance both, you know, measured by what people were paying to go long and funding rates as well as relative to hash rates or many other things was dramatically higher than we were a few weeks ago at 126. I mean honestly triple, you know, by, by most objective mathematical ways of measuring it. So yeah, things can happen. The, the sole question really is the, you know, the supply at levels that no one really knows where. You know, we always talk about price discovery. Price discovery is quite literally what price will bring out sellers. Well, we know that this 100 to 120 range brought out a lot of selling. The question is, is how close is it? Is there, you know, another 3, 4, 5 million bitcoin available at these levels? I mean seriously. And there might be. And that means we're going to stay here for a very long.

B (47:19)

It was 400,000 sold in the last month by whale wallets was one thing and I Think yesterday another $45 billion worth of whale wallets.

C (47:28)

Right. So, so understand that we don't know what the actual supply really is. Everyone talks about Bitcoin is constrained, it's static supply, it's not price elastic. Well that's a bunch of. Yeah, the overall supply is, but there are a lot of people who own it from another level. And if you believe that Bitcoin is going to ultimately go to a million dollars, you know that on the way for that to happen, at least another 5 or 6 million bitcoin need to come out of those original hands and into the financial system. And we don't know the prices that's going to take and where that's going to be. But you know, I'll tell you what I, I'll take if you. We could get a year of October's in a row and we took 4 million, you know, plus Bitcoin out of those hands and into newer hands, then I think that the S curve and the, the speed of, of, of appreciation would be breathtaking. But that's just not the way markets work. It just doesn't happen like that, Scott. I mean at least none that I've ever seen, not at this scale. Right. So that, that's really that point.

B (48:35)

Yeah, we had. Mark, Mark was actually. I interrupted Mark on the correction. So you were still making a point there, buddy. If you if you want to keep going.

J (48:43)

No, I think that we've seen it and we need that perspective. You know, like this called the Zamboni look, just taking a little cut over time in order to see what's going forward. And then the unspoken one, which a few spoke folks, I don't know if I know that Andre is on the call. I don't know if Andre, if it was you or your firm, some talking about the distribution. You know, this is just new hands coming in. This is a painful transition and much is learned and gained and lost in transition. And this is a very constructive transition. The hodl wave of 10 years is still rising. So a lot of these coins on average are still coming from across the spectrum. Yes, whales, but you know, from the tourists in that kind of two to three year period as well.

C (49:35)

Yep. Andre, I see your hand up. So obviously you, you.

B (49:38)

I just love that our painful distribution is above 100k. Okay, go ahead, Andre.

C (49:44)

That's not by accident.

E (49:45)

Yes, I think, I think you're referring to that Jordy Vissa piece.

A (49:49)

Right.

E (49:49)

IPO moment. And I think Matt Hogan, he's also commented on this in his latest CIO memo. But I think it's completely right. I mean what we've seen just a couple of statistics around this. I mean we've seen massive long term holder distribution. We've seen around 400,000 bitcoins being distributed in the cycle by long term holders. We've seen that DATs and, and Bitcoin ETPs have absorbed around 33% of this distribution.

C (50:22)

Right.

E (50:22)

You can, you can calculate this by just looking at net flows and net buying by, by these companies ETFs and dividing it by the, the amount of profit taking by long term holders. So it's been around 33%. It's not much right there, not even half. But it's been like a structural bit. Right. It's been quite consistent although it's, it's been slowing down more recently. But I, I think what's quite remarkable is we've seen this long term holder distribution which is quite.

A (50:54)

It.

E (50:55)

It looks like cycle top type of distribution. Right. But still we haven't seen a full bare market flashing out yet. Right. Might, might materialize. I don't think so personally could materialize. But it's been consolidating. Right. Bitcoin's been consolidating since one year. Right. But the key to, to underscore is consolidations. They don't create ceilings, they tend to create flaws. And I think if you look at the vol compression, usually VOL is like. I mean, it tends to mean revert. Right. If you have, like, low VOL tends to foretell like this, like a highball regime coming and vice versa.

F (51:41)

Right.

E (51:42)

So I think we'll see a spike in volatility going for. We've just seen one red to the downside, but I think we'll probably see another one to the upside. Because if you're looking below the surface, you can already see that there's massive accumulation going on as well.

B (52:00)

Right.

E (52:00)

We've seen accumulation addresses accumulating, I think, 340,000 bitcoins over the past 30 days, which is incredible.

F (52:08)

Right.

E (52:09)

We're also tracking, like, accumulation across different wallet cohorts. So, like small wallets, big wallets, whales, and so on. And this accumulation score has. Has been grinding higher. Right. So into this dip. And so I think we'll probably stabilize pretty soon because of sentiment all. All of these factors that we discussed. Right. And yeah.

B (52:32)

I agree with all that. I think everybody's freaking out for nothing.

C (52:37)

People like to freak out. It's the most predictable thing in finance that as things start going down, it accelerates and people overreact at the bottom. And as things start going up and it accelerates, people overreact at the top. It's always like that. And, you know, it's, It's. It's a. It amazes. It will never cease to amaze me that that's the case, but betting against that is like betting against the sun rising in the east and setting in the west. I mean, you could do it, but it isn't going to work out too well.

A (53:05)

Ryan, I will say I. I do enjoy the. The commentary on. Welcome to the bull market. Oh, man, we're in a bear market. Welcome to the bull market. Oh, we're in a bear market again. It's every other week. We're in a bear market right now.

B (53:19)

It's over. We're so back. It's over. We're still back.

A (53:22)

Yeah. So I think next week will be the bull market again, if we keep following the trend.

B (53:28)

Yesterday, yesterday, I was literally watching panic people panic sell, and I was quite literally panic buying.

A (53:35)

Yep. Yeah, same at the.

B (53:38)

The biggest, largest level that I have bought in a very, very long time. And, you know, there you go. Like, the, the opportunity to buy Bitcoin at 100k again, regardless of what comes next is. Seemed pretty spectacular for me. And I was hoping for it and got it. And I'm, you know, maybe it'll go lower. I'll buy More. Great. Go ahead, David.

C (53:58)

Yep.

D (53:59)

Hey, Scott. You bought my bitcoin. I want to thank you.

B (54:02)

Thank you, sir. Thank you.

D (54:05)

On a, on a more serious note, in a spaces that I wasn't on in the last week, I did share a link to a paper that was talking about technological change and asset prices written by a couple of guys out of University of Chicago. And long story short, you know, uncertainty, which is not knowing necessarily the use case to an asset, say crypto, you know, helps to boost actually the price of it. As things get to be better known, the prices tend to collapse. Now, maybe we should be thankful that, you know, beyond stablecoins and, you know, other cases, yes, use cases are being proven out. But, you know, are we at that adoption curve yet where we can see that this process of pricing out uncertainty and pricing in certainty is starting to be a factor to contend with?

C (55:01)

Yeah, I think, I think that's right. I mean, it's funny, I, I dragged my ass out of bed this morning and joined the More the morning finance show, you know, with David to wheel, who's often on, on this show too. And listening to a lot of the technical analysts from traditional finance talk about, you know, bitcoin, it's like, you know, everyone in crypto thinks that Mike McGlone is one of the only people who believes what he believes. No, I think it's the actual, the, the it. I think it's a, a very prevalent view in the market that these technicals matter. And I tried pointing out that you have to look at the denominator. You can't ignore 10% a year of increased dollars and just stuff, not just dollars, but also yen euros in circulation globally and look at prices in a vacuum. And you can do that a little bit in stocks, although in the case of the stock market, corporate earnings have been growing at just as fast a pace. So arguably it's really just inflation in a different sense. But it is amazing how the technicians all think that, well, you know, you need to get bitcoin down to this level, you need to get gold down to that level. And they're all slightly different, but they're all dramatically lower than where we are here. And that's because they're ignoring the impact of money printing. And as bitcoiners, most of us are saying, well, but that is the point, right? That literally is the point. And at a certain point it becomes very hard. And Andre, I'm curious, your hand is up, so I'm hoping that, that you have a thought here. But it feels to me like, there are a lot a rising tide of institutional investors that actually understand that point. Right.

E (56:40)

My hand wasn't up.

C (56:42)

Oh, it is on my screen.

E (56:43)

Maybe it's glitching.

A (56:45)

That's good.

B (56:45)

It's 11:15, Dave. So, you know, it's a good segue to ending the handless.

C (56:52)

Yeah, whatever. Yeah, but, but I mean, Andre, you guys are talking institutional investors all the time. And, and I assume that that is the main theme that you're talking about. The, the quote, debasement trade. We haven't mentioned it in this trip. In, in this.

E (57:07)

Yes. Debasement trip.

J (57:08)

That.

E (57:08)

That's like the part. Also the topic of our next webinar, which is tomorrow. I mean, we talked about this like at Drum. Right, right.

C (57:16)

But. But, but the, the point of it is that it changes graphs. Right? You. Because you have to factor in adjustments to each of the lines that you're looking. Looking at. That's really the point. And I think that that's. That's missed by a lot of people, but it's not missed by the core people that investing in this asset class.

E (57:35)

I think like the, the most obvious selling point of bitcoin and crypto assets is like sharp ratio risk, increasing risk adjusted returns and portfolios, essentially. Free lunch for fund managers.

B (57:49)

Yeah, just get 5% in there and see what it does. Pretty straightforward pitch if you look at the Sharpe ratios historically, right?

A (57:58)

Yes.

B (58:00)

All right, Dave, anything else?

C (58:02)

No, I don't want to start any new topics today. I think we'll have some more to talk about. You know, things like Supreme Court cases on tariffs and all sorts of other crap that we could talk about later in the week, but for now, I think.

B (58:12)

Yeah, and tomorrow we can talk about Bitcoin at 75k. So we just gotta look forward to that.

C (58:18)

Anything's possible, dude. Anything's possible.

B (58:23)

But not probable. But I'm still here for the models that are telling me I'm gonna be three times wealthier by Thanksgiving. So I'm just gonna roll with that as the next title and hope for the best. That's all we got. Guys, thank you so much to everybody. We'll be back tomorrow for another crypto town hall. Thank you all.