← The Wolf Of All Streets
The Wolf Of All Streets
Does Bitcoin’s Next Mega Rally Start NOW? Shocking US-China Twist Sparks Bull Frenzy!
01:04:39
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- [00:02]
Scott Melker
Bitcoin is only a few percent off of its all time high. Leaving many to wonder does the next mega rally start now? It certainly has seemingly started for altcoins. A lot of this on the back of good news about trade deals around the world of course the UK and the United States last year and now potentially something happening with China. But interestingly bitcoin hasn't really moved on the China news while S and P and NASDAQ futures are massively up. We have so much to unpack today with the team James, Dave and Mike. Another macro Monday is here. Let's go, let's dope. What is up everybody? I'm Scott Melker, also known as the Wolf of Allstreets. Before we get started, please subscribe to the channel. Hit the like button. Good morning Mike, Dave and James. Holy crap guys, what is happening? We have stocks up big. Bitcoin has been up but it's flat. We have Treasuries yields way up, gold down, dollar way up. These things don't necessarily align. Mike will start at the at the meeting. What I do want to know is have any of the kind of mega bearish sentiment Gina, Martin Adams and Anna Wong, has anybody turned bullish with this huge move that we're seeing now to the upside?
- [01:37]
Mike
Not from the morning meeting. What you described is the exact opposite of Q1. Everything went down including yields. Everything is going back up and bitcoin's the best leading indicator. You mentioned that. But from Anna Wong she noted about the tariffs. The trade war is not over according to her. The 90 day reprieve says it's partly because I think Trump she mentioned Trump was worried about empty shelves and this should come back. She still expects the May and June non farm payloads to be quite weak. CPI expect to be modest. Keith thinks she's worried about inflation to be contained but worried about now. If we kick into more of this wealth effect it means inflation takes the Fed out of the picture for potential easing. Chris Kane filled in for Gina. Gina is still sticking with that red warning in stocks. He did point out earnings have been good. Defensive factors have been leading low volatility stocks. That's the key thing. Ira Jersey pointed out that expects that the Fed's rather late. Fed's wants to be late but rather be correct and late than early and wrong. So this Fed's out of the picture particularly with risk assets going up. And that's the key theme from the morning meeting.
- [02:58]
Scott Melker
Fed's out of the picture today but still markets are heavily pricing a cut in July. Correct. Whether that's right or wrong, that is what the market is seeing. I know, James, you always show us that chart, but I'm assuming that's still the case.
- [03:10]
James
Let's see. That's a good, that's a good question. It's been 3/4 cut over 80% or something. Yeah, yeah. Now it looks like it's only like, only priced in half a cut going into December now, which is, which is interesting from last week it's down another 25 basis point. Up another 25 basis points meaning the Fed funds rate would be, it's implied at 3.7. So, and that's, remember that's middle of the range. The effective rate right now is 4.3. Even though it's 4.25 to 4.5 is the range. But yeah, it's interesting the, the Fed out of the picture. That's, that's, that it's a, probably a good way to put it. Mike and I agree with that. And the reason is the. Look, Powell has said it in his news conferences before his press conferences before he said we, we will risk being a little bit late because we have tools to deal with that we don't have tools to deal with like overinflation, not hyperinflation, but excess inflation. They don't have tools to deal with that except raising interest rates and, and doing QT and that those are like, those are imprecise tools. It's like doing surgery with, you know, a chainsaw sometimes. So, you know, they would rather flood the market with capital and liquidity if need be. In a situation that we have a, an economic downturn and they're a little bit late. It hurts the little people and they're central bankers and they don't give a shit and they're just going to continue to, you know, debase the currency along the way. That's the plan. That's really the only plan. And that's just reality print, baby.
- [04:51]
Dave
Said it many times. Yeah, at the left hand and the, and the right hand you got, everyone's looking at rates and what's really happening is liquidity and that that's what they're going to do. I've not been, you know, I've said I didn't think they would cut in July. I still don't think they're going to cut in July. I don't think they're going to cut until unemployment goes up over five, five and a half percent. And I'm not sure that's going to happen. So there you go.
- [05:16]
James
But there's only a 30, 35% chance of cut in July according to the Fed funds futures today, which is. That's a significant move off of where it was.
- [05:24]
Dave
Consider me in the 65%, but I was in the 20%. I was in the 5%. You know, it doesn't really matter. Or in the 0% when it was 100% because that was insane.
- [05:32]
Scott Melker
How much. You guys have obviously been watching this for longer than me. How many examples do we have in the past of the Fed pivoting, continuing to cut or even pausing like this and then seeing some sort of panic and actually raising rates afterwards? Do we have a history that Volcker did that basically correct?
- [05:52]
Mike
The most recent relevant was what we did in this whole cycle. The Fed stayed way too easy for way too long. Trump pointed that out. Stock market made a new high at the end of 2020, beginning 2021, and they kept rates low until 2022. And then they raised too much. We've cut back 100, but we're in the middle of that right now. We're in the middle, I think of cycle Evers. Fed was way too late. Now we have this massive wealth effect. Inflation sticky. Fed can ease. We're stuck.
- [06:20]
Scott Melker
Yeah, I guess that was my question is, you know, if they cut rates in July, which still or even through December, and then we see inflation go up.
- [06:28]
James
You saw it in the mid-90s. They did that in the mid-90s where they were cutting. They were, they were raising. They were cutting. They were raising. It was just, it was a clusterfuck back then.
- [06:36]
Scott Melker
Yeah. You know, just wondering if that's the path that we're on. Right. Because I see the argument, we made it here a thousand times, that inflation was transitory and that the Fed was too late. They're always too late. But now I can see why Powell is trying not to continue cutting if he doesn't know what the data is. But it's really, I mean, it's just a terrible situation.
- [07:00]
Dave
Look, look, Scott, I mean, this is, it is. Liquidity is the only thing that matters. It is funny you have to be old, but it used to be that liquidity was the only thing that matters. Money supply was literally the most important thing. And rates people didn't give a crap about. And you know, it's just, you know, what's old is new again. Right. You know, it's, it's not terribly surprising. Supply and demand, first first week of economics course, that's what drives prices. And you know, when the supply of dollars is constantly going higher, and the supply of yen is constantly going higher, and the supply of euros is constantly going higher. It needs to find a home. And so then the question is, what's the home? And that's, that's really where you're at. And that's why when you hear sailor talk or you hear anybody else talk in the bitcoin world, they say, well, don't. Don't buy depreciating assets when you see that. That's why there's this fight over the stablecoin bill, because there's about $6 trillion in deposits that will, will end up in money market funds and be available instantly for investments with no friction. And that is going to happen. It's just a question of how does it happen and when does it happen? And we do need to talk about last week's stuff because that talk about a clusterfuck. Gillibrand being a sponsor of the bill and then voting against it is one of the most cowardly acts I've seen in a very, very long time. And it makes the Democratic Party, and I've said it before, and I'm happy to say it on the show, it's acting more like a politburo in Soviet Russia before. And I said Soviet Russia. I'm not talking about the current one than like a political party in a democracy. You know, clearly the money flows are being centralized in the Democratic Party, and clearly that's what's happening. To get 100% of them voting against a bill that many of them had supported out of committee is a big deal. And we need to talk about it because it really matters. When you worry about liquidity, $6 trillion between checking accounts and savings accounts that pay basically no interest is a very big deal, and we don't need that to be that way anymore. And everyone kind of understands that technology has made the need for that go away. And community banks, as Austin Campbell talked about and others are, and the banking sector is pushing. And so it's a big deal. To me, that's the biggest story of the last week, the tariff reconciliation. The biggest story about that is what Percent said on Sunday. Basically what he said to kind of tldr it is, we're not going to get to, you know, it's. We're not going to be across the board. We're going to be strategic. He said, effectively, what James and I and Mike were all saying when the. The day after Liberation Day, that first macro Monday, you go back and roll the tape, we all said it was crap. We all said this is ridiculous, they should be targeted, etc. What he basically said is that's what we're going to do. So effectively they've rolled back the, the nonsense and going to be moving in that direction. And so yeah, there's going to be a lot of implications there. But I do think that liquidity is what matters and that's why risk assets have gone up. It's also Mike, every time you say bitcoin's a leading indicator here you have a weekend. What you have this weekend is exactly what you're seeing. You're seeing inside of crypto, a rotation from bitcoin into alts. Outside of crypto you're seeing bitcoin sort of participating and so the money is kind of feeding it. So bitcoin is flat. But when gold is down 3% and Nasdaq is up 3% and Bitcoin is flat, it's telling you it's 50 50, right? It's not a leading indicator of anything. It is what it is. It's its own beast and I suspect you're going to see a lot of that.
- [10:35]
Mike
If you want to team me up, fine. On the year, Gold's up about 24%, Bitcoin's about 11. Crude oil is down about 12. Beta is flat potentially as of this morning. Bitcoin, gold, that ratio I stick with, Bitcoin is. It's kind of hard not to be leading in there. And it trades much higher volatility than stock market. It's bet to the stock market. A 16 quarter basis is 3x. Its correlation to the stock market S&P 500 on a 16 quarter basis is 0.66 which I use 16 quarters because of 4 month cycle. I'll be publishing on that. It's just an article I wrote Leverage Gold versus Beta that will be updating, probably publishing tomorrow. But the fact is just looking at the data and look what's happened this year. Lead on the way down first quarter, beta was down 4% or so. Bitcoin is down 12% second quarter, everything's going up. Bitcoin led the way up. Scott was on top of the very beginning. Maybe it's showing risks now. It's only one day but it's clearly leading indicator, especially bitcoin to gold. I like that ratio partly because to me it's indicated what I've been hearing in the macro that is it's flat since 2021. To me it's part of the macro that the US stock market is way overdue for a period of underperformance the key thing you learn in bear markets, which maybe this isn't the bear market in the stock market is you're supposed to buy the first dip. We've had the first dip, we're back to unchanged on the year. I didn't think it'd get this far, but it is. What do we do for the rest of the year? We still have more. A long time to go here. And so look, I'll end with this. The key thing I point out in commodities we have this significant bear. Martin. Commodities, bear market. Crude oil, maybe WTI crude oil gets above $65 a barrel, but it's going down for a reason. There's no more demand pull on the global basis, there's more supply. What's the significant bull market in commodities?
- [12:16]
Dave
Gold.
- [12:16]
Mike
Gold got too expensive. Now it's stuck between in 3000, 3500. Maybe it gets down to 3000, which is good support in a bull market. But it's still way outperforming bitcoin. In a year we're seeing volatility increase. My point is this. By the end of year we're going to look back at this and I think most probably say yes, the stock market was overdue to go down. Maybe it goes down 20%, which I'm expecting right now. And if that happens, we fully expect gold to continue outperforming bitcoin to be lower by then the year. That's my point. It's early on. Now we have all this hopium, this optimism. We're back on change in the air. Are you supposed to weigh overweight long? Now bitcoin could be that leading indicator.
- [12:52]
Scott Melker
I know you're gonna try. I know you're gonna.
- [12:54]
Dave
You know what, you're right.
- [12:54]
Scott Melker
We're not having the same conversation again. I'm not doing it. I, I love you guys to death. We're not doing it. We know exactly where you're gonna go with this. We're gonna argue over whether it actually is beta leading indicator. Doesn't matter. I actually want to talk about back. James, you look like you have something to say and once you do, I share the screen. I want to talk about the actual tariff deal in China because this is.
- [13:11]
James
Yeah.
- [13:12]
Scott Melker
For Monday.
- [13:12]
James
Okay, but let's, but just, just quickly just to touch on the. I shared a screen here. Scott, this is Michael Howell. Loves to, you know, to. He, he takes the three month bitcoin like he takes bitcoin. He moves the chart back three months basically. And this is liquidity, global liquidity. GLI and Bitcoin and these, these are six week changes. So it kind of smooths out the data. But look, the, the reality is bitcoin really is dependent on liquidity just like gold is. I mean it's just the reality. And you can see here what, what is interesting about this is that bitcoin does have real sharp moves down almost a little bit earlier than that three month lag. When you have sharp moves down liquidity, you can see that bitcoin reacts a little bit quicker than, than it does when it on the way back up. So liquidity finds its way into bitcoin after expands. That's what you, that's what this is saying. It's saying that three months after liquidity expands, it finds its way into bitcoin and obviously gold as well. But that's reality and, and often into risk assets like stocks. But where we are in the cycle is it still has a little bit more to go likely. You can see here it's not perfect. It really depends on what the central banks are going to do. And that really depends. And a lot of that depends on, on the tariff situation. And that's. And that's right, Scott. So but I just want to share, share that and show how this is, this is kind of a really important metric that I like to look at.
- [14:48]
Scott Melker
I mean this is the more basic Bitcoin follows global M2 chart. I mean you can see it generally happens on the way and we know that liquidity here in blue is rising again and that bitcoin, many people expect it to follow. It's like the most popular chart right now on crypto Twitter I would say is probably this one. But I do want to dig more deeply into the actual US China deal, right? US China to slash tariffs during 90 day reprieve for talks. Basically. I think broad strokes was that it's down from 145% to 30% for goods for our tariffs and them going down to roughly 10%. But it's a 90 day reprieve. So anyone can jump in. I'm trying to unpack why markets want to go up so badly on all this news.
- [15:33]
Dave
Because it seems like. Yeah, yeah, yeah. So there's two things. The disaster scenario for the United States economy is supply chains being destroyed. Right. So like for example, my daughter works at, in, in the, the textile. Well, she works in the fashion industry. And what they are, what they were hearing is the textile manufacturers are basically saying they are completely. If the, the, in the original tariff situation they were completely. Literally it's just there's no way they're going to be able to get supplies. And so if you're a manufacturer, if you're, you know, whatever, it doesn't matter where your, your actual, you know the part down chain in the supply chain who's actually making the dresses out of the fabric. If you can't get the actual fabric, you're screwed. That was replicating throughout a plethora of industries. And so people, if you want to know why we went to the negotiating table, it's because lots and lots of companies throughout a ton of industries are basically saying listen, the supply chain is not ready for this sort of shock treatment. What's amazing about that is, is not amazing but interesting about that is that Besent effectively said the same thing on Sunday. What he said is, you know, in Covid he basically talked about the trade off between efficiency of supply chains and strategicness of supply chains. And he. And that's exactly right that, that he said in Covid we learned that our very efficient supply chains were very non strategic. And so what we need to do is get ourselves back into that position. But that takes time and that means more targeted tariffs about in places where we're actually ready to compete. So it lots of the things that we've been saying certainly that I've been saying which is that tariffs that don't.
- [17:19]
Scott Melker
Need and don't tariff things you need. Right?
- [17:22]
Dave
No, no, no. Tariff things that, that you are ready to compete and don't tariff things where it takes five years to build a factory. Right. You know, effectively that way. And so that is, is kind of the, the change and it is a change. It's a change towards being more strategic, more real world, less across the boardy on these big tariffs. But at the same time if you saw what Lutnick said over the weekend, he said specifically would you really how you know, if effectively there's a consult a broad across the board tariff is a consumption tax but it's a consumption tax that doesn't that you're exempted if you're buying us. And is that really that bad? That's effectively what he said. And you know, once again I've said similar things. I mean you know if you talk about a national VAT, if you versus national income tax and you can talk about those and yes there's regressive and there's all sorts of issues with that but generally speaking people don't get totally freaked out about it. And so you have the two people who are the two mouthpieces of the Administration kind of getting more together. That's why the markets are up today as opposed to this. Oh, my God, who's going to say what, when and where? And are we going to shoot ourselves in the foot? That doesn't mean we're out of the woods. That's why people are relaxing.
- [18:43]
Scott Melker
Yeah, I agree with you. In a vacuum, this is the thing we do, obviously, and I get it, art of the deal, all those things. But you make a situation untenably terrible and then you come to the negotiating table, make it better, and markets go up. But it's still 30%. Tariffs is wildly unsustainable and historically insanely high for all goods coming from any country, much less China. Right. So it's not like this is good. Is it just progress that markets are going on? And I'm not even questioning the strategy. Whatever. That's not the point. But we can't have 30% tariffs on Chinese goods in the United States and indefinitely break down.
- [19:23]
Dave
Not all goods. No. Well, I mean, it, look, it depends. What you're going to get is you're going to get exemptions in places where we can't produce. And, and the problem with all this, and this is what, where I, I have a problem is there's no way that government commissar, that government bureaucrats are going to be able to figure out which of the goods.
- [19:41]
Scott Melker
No.
- [19:41]
Dave
You know, to do it. I mean, the market, private industry. That's right. And so there's, there's definitely issues here, but, you know, it's like you have to look at, at the total package. I mean, the other thing that, that he did this week, which is huge news that is going to be a big political problem for people, is what he did in prescription drugs. Now, why does that matter? Because that gives him air cover and understand that that is a very big deal and he used trade language for it. It's for those who don't know. The story I'm talking about is his EO that says that the US Is going to have to be considered most favored nation. Well, anyone who's ever negotiated a deal and as a CEO of a company and have run multiple businesses, I can tell you, you do contracts with initial investors. One of the most typical things you do is your first investor gets most favored nation status. What does that mean? It means that if you, if your prices go down to somebody that they participate. What Trump basically said is pharmaceutical companies can't screw US Consumers and sell cheaper overseas, which is a very interesting idea. It makes a lot of sense. You Know, when you get people like Operation donnish, you know, Dr. Donnish, who I think we all know, a very smart guy talking about this, is saying Trump is, is maybe the best Democratic president ever, was his snarky comment this morning. But, but he's not wrong. I mean, Trump is moving the Republican Party to the center while, while all the media keeps saying he extremist. This is an idea that actually makes some sense. I mean, it's not, he's not saying we're going to control the price. He's saying, listen, if you're willing to sell XYZ drug in, you know, France or in Canada for, you know, $5, you can't charge $80 in the United States. That's what he's saying. And that is, and, and the part of the reason for that, why we have that problem is because still we have no price transparency or competition. And in drugs or medical services in the US now, that obviously is the next thing it needs to change, but I think that needs Congress to do something about it. But that's a big deal because it gives political air cover to really work on tariffs and try to normalize everything. And, and while I would imagine pharma companies are not doing well within, you know, today, I haven't looked to be. It'd be actually really interesting.
- [21:59]
James
I read this right.
- [22:01]
Dave
So now imagine. So now we have the S and P up 3%. But, but pharma is down big. So what does that tell you about the, the magnitude of the rally in non pharma? So there's, there's a lot going on underneath the surface here. But what's important is if you do something that's going to be wildly politically popular, it gives you air cover on things that, that, you know, are going to cause, you know, are going to be a little bit less happy.
- [22:27]
Scott Melker
If you're calling balls and strikes on the Trump administration this weekend, yes, we've all been critical of the tariff strategy, but they're obviously got China to the table. That plus Ukraine and Russia, I mean, Zelensky and Putin are going to sit down. That's relatively crazy. A ceasefire in India and Pakistan that looked like it was escalating. It's a lot of positive headlines here. Markets aside. I mean, that's a lot of progress in pretty major areas. But James, like you kind of said, 30% not sustainable long term. So what's the plan here and why are we trading higher than Liberation Day?
- [23:01]
James
Well, I mean that, like Mike said at the beginning, it's so much of that catastrophic Catastrophic risk has been taken off the table. And I think that's what you were saying, Mike, from the morning meeting. And that's, and that, and that's really, look, markets need, they have to price in catastrophic risk. That's what they were doing. And the catastrophic risk would be down 40, 50%, you know, so, but that wasn't 100% probability. So it was down 20% instead because there was a lower probability than 50, 50, that would be down 50%. Does that make sense? So that's kind of. The markets are pricing in instability and awfulizing in some areas the outcome, but it's all blended risk reward. And so the thing that kind of concerns me though, and it continues to concern me is the, just the amount of leverage that's in the system overall. And this is where I agree with Mike 100% that this is where you got to watch these bonds and the bond yields and what's going on with these rates to understand what's going on with collateral. Because collateral is really what drives everything. Because you need collateral to borrow and you need borrowing to keep this whole thing going. There's just no way around it. You have to keep borrowing. You have to have collateral to borrow. So one of the things that, and it's interesting because again I was reading in Michael Howell's letter and I agree with him is that, and I'll share this because this is, and I'd like to hear what Mike has to think about this. As a, as a former bond trader, this is something that's kind of interesting and could be worrisome. Do you see this Bloomberg screen?
- [24:50]
Scott Melker
Yep, I got it.
- [24:52]
James
You got it.
- [24:53]
Dave
Now it's coming.
- [24:53]
Scott Melker
So now we got it.
- [24:54]
James
Okay, so what you're looking at here is a Stauffer rate, that's a SOFA rate minus fed funds effective rate. Right? So the middle of the middle of the range today, the Fed funds would be 4.33. The sofa rate is the secured overnight financing rate.
- [25:08]
Dave
What is that?
- [25:08]
James
That's the rate that parties charge each other in order to borrow against things like US Treasuries. So you're going to secure and you know you're going to have a secured loan. Basically you're going to give somebody a U.S. treasury loan. U.S. treasury to somebody. They're going to give you dollars for that. Okay, so when the SOFA rate go higher than the fed funds rate, it shows that there's lack of liquidity in the system. And you can see here that it's been moving upwards. So you can see this trend has Been going higher that the difference between the rate charged and overnight versus the fed funds rate and it's becoming more volatile and that just tells you that there's a lack of dollars in the system. And so that's something that's concerning. And when you look at that in the move rate, the move rate has come back down to about 100 I think. Is that right? And is that James, is that why.
- [26:03]
Scott Melker
The dollar would be up and we wouldn't see stocks down or you know, a situation good? Yeah, because raising the rate, the, the price of dollars, even though, you know, because usually you have an inverse correlation.
- [26:14]
James
Obviously between risk and that's why this dollar, that's why long term bond yields, a dollar, that's all kind of disjointed right now. It all has to do with the liquidity. You pull one string and you've got all these things that happen that you're not thinking about. But this is really important. And so when you're worried about what am I concerned of? I'm concerned. What we started talking about the beginning of the conversation, which is we see economic indicators that are really soft and showing that we're grinding lowers an economy and we have a Fed that's loathe to get to or they're lackadaisical, they're not going to act quickly. They're going to wait for the data. The data is lagging which means that they're going to lag the lagging data and that it's just it, it happens over and over and over again. That's something that does concern me. But right now we're watching corporate earnings and we have to see where they, where they keep coming in in this next round.
- [27:14]
Dave
The, the other question I have for both of you guys is I'm looking at the bond yields. You know, the U.S. is up, you know, almost eight basis points. Germany is up, you know, over nine basis points and the UK is up nine basis points.
- [27:28]
James
That's money going back into the U.S. it's money, it's money flowing back into the u s. U.S. treasuries. Right. So it's.
- [27:34]
Dave
Then why is it, then it, why is our yield up too? You would think our yield would be down.
- [27:39]
James
Well, they're both. Well, it doesn't, doesn't necessarily mean that ours are, ours is, it's, it's up less. Right, so.
- [27:46]
Dave
Yeah, but only marginally.
- [27:49]
James
Yeah.
- [27:49]
Dave
Yeah. I just think it's interesting that it's.
- [27:51]
James
Across the board, but it's also going into, it's also going into Risk assets across the board, money's coming out of bonds. That means the bond price goes lower and the yield goes up because they're selling bonds to go buy your risk assets.
- [28:04]
Dave
Exactly. But it's interesting that it's global, it's not just the U.S. that's my point.
- [28:08]
James
Yeah, absolutely. Because because of the kind of this backing off of the, of the tariff war that we kind of waded into.
- [28:18]
Scott Melker
NASDAQ just opened gapped up 4%. Yeah, there's a product.
- [28:22]
Dave
There you go.
- [28:23]
Scott Melker
But still, I mean that 4% move, Mike, I mean is that simply just what you said before and what James just reiterated, that the catastrophic risk is off the table so everything up.
- [28:37]
Mike
So that's the thing I have to put on my macro hat is that we know that we've seen the Fed's willing behind be behind the curve stated goal of the Fed. We know that we've seen austerity in this country arguably but there's certainly some significant cutbacks on that fiscal. We've seen, we know tariffs are there. Tariffs. Number one thing about tariffs is they hurt corporate profits. That hasn't changed much yet. We've got past the abyss of 60 Vix but now we've had a gap open higher back to unchanged on the year and the Vix's blow is at 19. My first thought is if you were smart enough and astute enough to buy when everything hated it, when you know when Vix was at 60, you're supposed to be selling now testing shorts make the market proof strength. Now we all know what's happening. Everything goes up together, including yields and we see things leading that now it's okay, make it prove that. My bias is this is the year that we're finally supposed to see a down year in equities. Now prove it, prove otherwise. But the macro is like you said, this is so global and then we have to look over how did we get here. We got to the highest US stock market valuations and versus the rest of the world and versus commodities in multi decades by doing the opposite of what we're doing right now. And you're seeing that in commodities, like I've been pointing out this for a while, crude oil going down, gold going up. There's still a bull market in gold, a bear market, crude oil. Now we're adjusting. That's my point is as we get to a massive gap open higher and enthusiasm on a Monday, my thought is if you're a leveraged trader, you sell.
- [30:06]
Scott Melker
I don't disagree with that. I mean you See this big, everyone knows you see a big gap there from the weekend and you short it until the gap closes even at the very least technically.
- [30:14]
Mike
Right, but make it prove, make it proof strength. Stay above that 200 day moving average in beta and this S&P 500 which is rolling over, stay above that, stay above that. That 200 day moving average in Bloomberg Galaxy Crypto Index which is rolling over. These are just levels. This is a great opportunity I see and to make it prove it. And by the end of the year, if everything's up, wonderful, we're great. If it's down, that's a global depression kicking in.
- [30:36]
Dave
I think that, I think that, you know, look, we're a macro show, but we're also, our primary audience is crypto. So let's, let's talk about this in terms of what you're looking at. You know, whether you're talking about Ethereum or Solana or Chain Link or you go down the chain towards, you know, towards Sui or Phantom or, you know, get more esoteric and certainly things like Tao, you know, Bittensor, what you're seeing is a belief in the crypto community. True or false doesn't matter. It's a belief that, and it's a fact that unlike stocks, those things in mass are down 50% plus from their highs, whereas the stock market is basically bumping up against very close to its all time high. So yes, you can say, and they're all risk assets, there's no question about it. No one in the planet is going to say that Bittensor or Chain Link or Ethereum aren't risk assets. But there is this thing in markets where all risk assets are not created equal. And if we ever get to a point, and I think we're there where we don't, where everything doesn't move together and you can't throw a dart at a risk asset and know that it's going up because we're pumping liquidity. Then the question is what do you buy, what do you sell and how do you position your portfolio? So Mike's General statement is 100% I'm on board with which is don't buy at extreme stretched valuations when volatility is, you know, has come off this, I mean this is the time when you take your profit. I, I agree with that. Except that the things that people are buying in the crypto sphere are still down 50 from their all time high. They know we're close to or way more, way more depending on what you.
- [32:16]
Scott Melker
Are now you're talking about Doubling that we're down, you know, 99 that are down, you know, less 90.
- [32:22]
Dave
It's it. But look, look, a lot of this stuff's going to be worthless and a lot of them are going to have real terminal value when they address their markets. And so the question becomes, you got to figure out which is which. But the entire. But the risk narrative as a macro show, if we come to the conclusion and we say the following. The following two points which more or less. I think I agree with Mike on one, that risk assets are not necessarily in a deadly situation from a macro point of view anymore, but many risk assets are dramatically stretched on valuation. Then the question is, do you sell everything or do you sell the stuff that's stretched on valuation? To me it's the latter. And that's really where I'm a little bit different. And notice I haven't talked about bitcoin because I don't believe it's trading like a brisk asset. I think that there's some things about bitcoin like for example, everyone thought Michael Saylor buys on the weekend. Reality that's not true. We know this quite conclusively today because.
- [33:17]
Scott Melker
Announces them on the weekend, people.
- [33:19]
Dave
He announces it on the weekend, but he clearly bought it early last week because for the fourth week in a row he's. His buys are well below the price that it was when he made the announcement now that it wasn't clear because of the volatility how that was. Well, now we know it. Now we know he's buying. He bought in weakness early in the week and then kind of wrote it up. And so it's. That's kind of interesting. So this, this narrative that people keep saying that he's always like top ticking and pushing the price order to get it done. That's just not what he's doing. And I think James has known that but really hasn't been able to say because that might be considered inside baseball now it's public because it's obvious from the chart.
- [33:59]
Scott Melker
He's also like, you know, sailors have been self deprecating about it. He's made the joke I'll be buying the top forever. Right. It kind of feeds that snowball, but it's not. It just buys.
- [34:09]
Dave
Why does this matter? It matters because you're looking at supply demand dynamics and, and look, you know, you made the point this morning. You had an interesting tweet which I had a quick response to Scott. Right. You know, which is in a bubble. Okay, so then why don't you say what you did. And then we can respond to it because I think that it's really important because we, we are trying to understand macro trends and I think a macro trend. I don't like the words alt season. I really don't. I hate it because it, it implies the same sort of stupidity, which is let's just buy everything and throw a dart. But I do think that, that, that people are looking to. That there's money that is looking for a home, that wants to invest in things that they believe will have value.
- [34:53]
Scott Melker
As mark as this market, Ethereum went up like 30 in a day. I think that that's a pretty classic shortcut. Yeah. I think that what you're saying is very accurate.
- [35:03]
Dave
100.
- [35:04]
Mike
Yeah, Dave was all over that one.
- [35:06]
Scott Melker
Yeah, yeah, absolutely. There was never. Yeah, I mean, the, the Ethereum at 1400 Revisiting the 2018 bull market highs was as gratuitous a buying opportunity as Bitcoin at 74. On this retrace, you know, a couple weeks ago, this is what I said and I'm assuming this is the one you're talking to about. I hate to even think this because I'm a huge fan, but Bitcoin treasury companies raising debt to buy bitcoin could be the next bubble. That's what I said. And it was because. And I love David Bailey from Bitcoin magazine, but David Bailey's Nakamoto to merge with kindly MD raised 710 million to start Bitcoin's treasury strategy. This is the exact playbook from what I've read superficially as Jack Mahlers is taking with Softbank and Canor Fitzgerald et al. It's obviously all mimicking with very little nuance, exactly what Saylor is doing. And I think we're seeing in my mind a bifurcation of strategies. I think everybody here wants to see more of this, which is companies adding bitcoin to the balance sheet. I don't know. Meta plan. It's mechanics, exactly. But I think we all want to see, you know, the Teslas and the squares and companies saying. Companies saying, listen, 5, 10% of our cash balance sheet should be in bitcoin as a hedge. But turning every, all of these companies and this many of them into vehicles to leverage Bitcoin.
- [36:27]
James
Well, seems a bit scary.
- [36:29]
Scott Melker
And why do we need so many. And listen, like I said, like, I like it in. Not conceptually, obviously, but. Yeah, James.
- [36:35]
James
Yeah, let's, let's pull that apart a little bit, though. First of all, nobody's going to catch Michael Saylor and in his quest to be the largest bitcoin treasury and you know, he hasn't said this explicitly, but let's back up 21, which is the Kenner Fitzgerald CEP SPAC that that is, is buying or merging in 21. It's got, it's got Tether and Softbank with the. What's important about that one is that they have, it's different than the other treasury companies at this point because they've, because Jack Mahlers and the, and the, their team have explicitly expressed the goal to make a bitcoin finance company. So their, their goal is to get enough bitcoin on their balance sheet that they can do things like collateralized loans or, you know, you can borrow against your, your bitcoin and other and other products that the companies that have enough bitcoin will be able to do. Well, they're going to have to get a lot of bitcoin to do that. That's number one. And so, but that's their goal. That's their stated goal. So that's a little bit different than just companies putting bitcoin on the balance sheet and holding it. And Michael Saylor has not said this explicitly, but it's kind of obvious that he will do that too. He will eventually have products that are created around all this bitcoin that's got his balance sheet. So that I do like, I don't like, you know, just random companies just trying to mimic the microstrategy strategy. The strategy strategy because they're so far, they're so far behind. It's, it's okay. There's nothing wrong with it. Having, adding, you know, bitcoin to your balance sheet is, is going to be healthy for, you know, most companies, I believe, depending on liquidity and, and you know, how much.
- [38:33]
Scott Melker
Yeah, but like you need to raise debt to do it.
- [38:37]
James
That's a different, that's a different dynamic. That's, that's the, that's the point. It's like nobody's going to catch MicroStrategy on that. So the treasury of a company, there is a nuance. The other thing is Meta Planet. The Meta Planet thing is that there's no function for retirees and individual investors to buy Bitcoin in their accounts in Japan. So that's why that is a proxy for it. That makes sense.
- [39:04]
Scott Melker
That's MicroStrategy two years ago. It makes perfect sense. Right? I mean, MicroStrategy, the argument was there's no ETFs, nobody really wanted to buy GBTC. So you buy MicroStrategy for exposure to bitcoin. Obviously it's evolved into that. I see that. I'm just concerned if we end up with 20, 30 of these companies. We see miners already doing it. Just debt, debt, debt, debt, debt, basically getting leveraged long. We will get a 50% drawdown in Bitcoin at some point. I don't know if it's, it reminds me from 150, but we will. And a bunch of them are going to then be the triggering sales of bitcoin because they're not as savvy as Michael Saylor and they're going to get liquidated and they're going to have issues and that's going to con going to be the thing. I shouldn't say that I think it's necessarily the catalyst for the next bear market, but I think it'll push bitcoin down an extra 15% next bear market because at the bottom they're going to be forced to sell.
- [39:53]
James
Yeah, but it reminds me more of, and you know, you guys can remember this, especially Mike and Dave were trading these things, but it reminds me more of the 99, 2000 tech bubble where every single time you had somebody, some company announced that they have a new dot com title, you know, it was like this, it went up, it went up 100, 200, 300. It's insane. So we're having the same thing happening in the markets here where if you announce bitcoin treasury, oh my God, you're up 20, 40, 50, 100% or more. And we're, we're.
- [40:30]
Dave
Yeah, but, but you're not. I mean, that's the thing. I mean, yes, look, I remember initially they come back is the perfect example. So GameStop went when they, they, they were at 25, he announces, drops to 22 and now rallies and it's now trading at 27. That's not the kind of move that you're discovering. And there and there. And GameStop, more than almost any company on the planet is prone to.
- [40:56]
James
GameStop, GameStop initially went from 25 to 30. Okay. And then it dropped because there was no real plan, you know.
- [41:08]
Dave
No, look, I, I know because I bought GameStop when it happened at 25. I don't think I ever saw 30 in my account down. I mean, you know, if it did, it wasn't maybe an intraday, but it pretty much dropped immediately and now is rallied back and it's slightly up, you know, it was slightly. I mean it's up 10, but it's, you know, whatever. I mean we, we. It's funny, Mike and I both kind of laugh all these people who like say a 10 gain, it's like, yeah, you know, 10 gain is pretty good when, you know, yeah, it used to be a good year. So it's like, you know, you look at this stuff but, but the thing about it is, is we're not seeing it in the crypto world. I mean the funding rates, even on Ethereum funding rates are low, you know, at these levels. So it's like the perpetual, it's not coming from, none of this is coming from the derivative side. That's really the important side, the important thing there. But you're right, I mean, I, I think that, that when we get a blow off top and, and I always harp on the, you know, the bitcoin hash rate versus price chart, but the, the bitcoin hash rate versus price chart is, if you go back to all time is, is really, really indicative of something. So you know, that to me is the, is, is the point. The point is, is that you have a network that is six times stronger than it was back the last time bitcoin made its high when it went got that gap back, price is still well below that hasn't even come close to euphoria. And I guess it's possible that this time will be different, that we won't see euphoria and, and over, you know, over, over exuberance on the asset. But every time someone says this time is different, you know, people like my Mike and myself both, you know, go, oh, that's when the, the big red warning sign is when people say this time is different to justify high prices. But when people say this time is different to justify low prices, it's equally true that, that the reg sign and, and honestly, the amount of euphoria in this market, in the crypto world is just not there. It's not even close to there. And so that to me is why I, I say what I do. And when you look at a macro backdrop that has become suddenly constructive and the reason markets are up today, frankly are because people don't know what to do with their money. Right? You know, it's like they're trying to figure out where to put it. And, and that, you know, because we are creating more money, as James keeps talking about, and so you have to put it someplace. But do you really want to put it in, you know, where the, the market cap to GDP is double and at the high end of history, or you want to put it in more speculative stuff? You know, that, that, that is well below its high and people ultimately end up moving to. It's like the whole nifty 50 or the dogs of the Dow. Remember that one, Mike? Dogs of the Dow. You know, in, in bull markets, the dogs of the Dow did crazy well. And it's just, it's for those who don't know what that is. Back in the days when dinosaurs work the walk the earth, you know, in la in the last millennium, there was a strategy that said that buy the underachieving stocks from the previous, from the previous regime when markets start to move higher. And that did. And it was a. You know, it's. Obviously we're much more sophisticated today and the dow is only 30 stocks. But it's funny, you know, I, I kind of feel similar energy.
- [44:22]
James
It's pretty much, it was pretty much. It was a lazy man's sector rotation.
- [44:27]
Dave
Yeah, exactly, exactly.
- [44:29]
Mike
So I think I really appreciate you touching on the systematic risk now of this mentality of people not even considering you don't have to buy other stocks, other sectors. You can buy bonds and stick with cash and just not lose money when anybody else is losing money. And that's why there is a complete systematic risk. Now unfortunately, I've been calling the inordinate burden of Bitcoin going up. And let's remember why. What was MicroStrategy? You started buying Bitcoin in the first place because they're a failed company in terms of competing in the market. He admitted it. We can't keep up anymore. Jeff Booth pointed this out. Technology is happening so fast. If you're a company Even like GameStop, I was so elated to see Coinbase decide not to double down on their correlation to cryptos by not buying, putting Bitcoin in their, in their, in their holdings. It was like, oh thank God. I mean you're already two times leverage. But now what's happening is we have a complete lessons in life is just a pile on facts and you never, you want to be signed when they're yelling. So let's look at 2020 when those of us got really, really bullish Bitcoin because we encrypt as we can see what's happened. The it took basically 3 bitcoins and match 1s and P500. Basically 3. That's when Sailor popped down. We had the biggest money pump in history. Now with the highest ever, it's basically 18 bitcoins +1s and P500. So if you're part of a stock market and you're putting that in your treasury you're doubling down your risk. To me it's like an oil company buy another oil companies and putting in there in their reserves. No, you're supposed to stick with Treasury.
- [45:57]
James
It's silly, remember? Let me finish being adopted though.
- [46:01]
Mike
So it's, it's. I get the adoption things but there's places where when you have high volatility and high correlation to beta, you're supposed to look at more of a trader standpoint. It's the most traded space on the planet. Cryptos are casino, there's millions of them. And on the year they look at the market vectors crypto index, it's unchanged, it's great for trading. The only thing that's really been going up is bitcoin. Now we have this issue where everything's back up, beta's up, yields are up. And what do you want to do here? I'm like this is to me a classic opportunity. But the thing that you're pointing out is just think of the systematic risk simplistically of bitcoin doing what it has in history. So let's look at that last example. When 2021 it corrected about 76% to the low in 2022 a normal correction for Bitcoin is 50% from the peak. Now we've gone back up near the high. We haven't had that full correction. Maybe it makes all too highs it's going to happen if it does and it's partly because stock market keeps going up. That point I need to make is we have virtually never seen a period of at least a quarter. There's certainly not a year where bitcoin's gone up and stock market's gone down. That's my point. It's 0.66. The 16 quarter correlation of Bitcoin to, to beta. It's 3x Bitcoin correlation to stock market. So my point is going forward, maybe we'll get lucky. Maybe it's different this time. My point is anybody who's buying this asset had fully expect to lose more when the stock market goes down. And this year is a good example. Example Beta was down 4% Q1 Bitcoin was down 12%.
- [47:28]
Dave
Bitcoin was down 12% from a intermediate peak based on an idiosyncratic thing. If you smooth it out and go back to November, your numbers don't are wrong. And, and we have to understand there was this massive peak because the President United States came out as a bitcoiner. You know to say that has anything to do with stock market Beta is just, it's just silly. I mean I can't even.
- [47:51]
Mike
It's the numbers, you're mathematician, it's the fact on the screen.
- [47:55]
Dave
The beta history a number.
- [47:56]
Mike
You're not 16 quarters. It's a cycle. Let's just look at the rolling 16 quarter correlation peaked in around 2011, around 0.67. Right now it's 0.68. It's the highest since 2016. That's just the fact of the rolling 16 quarter. And then we have to agree that it works in four year cycles. That's 16 quarters.
- [48:18]
Dave
You, you have to agree that logic, the very first thing they teach you is the difference in correlation and causation. And sometimes the causation lines up and sometimes it doesn't. Now liquidity clearly is causation. James has talked about that. And stocks and Bitcoin are both on causation. But there's this other thing that's going on. There's other things called adoption. And it matters a lot.
- [48:41]
Mike
Agreed with that.
- [48:42]
Dave
The, the network in bitcoin, the bitcoin network. Network. The hash rate in the network is six times what it was in the 2021, you know, hype. The 2021 hype was massively overextended compared to where network and wallet and every other adoption metric was.
- [48:59]
James
Scott, can you bring up the, the price versus hash rate.
- [49:02]
Scott Melker
Sorry, yes, one second.
- [49:05]
Dave
It's an easy, it's an easy one. It's just a massive difference. And so to me that matters. Back when that happened, the only people who could buy bitcoin were. And people were paying through the nose. Just remember when this was happening. Which one's that? Okay, well, yeah, yeah, it's.
- [49:25]
Scott Melker
Which is green price. Yeah, I mean that's a bit one price catching up. Yeah. Oh yeah, that's the price and hash rate.
- [49:31]
James
Yeah, look at that.
- [49:35]
Dave
That visualization is different than the one that I was look at. But it's the same chart. It doesn't matter. It's, it's just where you.
- [49:39]
Scott Melker
Here's the one I always look like. Blockchain dot com.
- [49:42]
Dave
Yeah, that one's, that one's easy but you can see it. But, but keep in mind what was going on in 21. So you know, I had a friend talking to me about grayscale. Oh, this great thing. You're an accredited investor. This is free money for you. All you got to do is buy this thing and then you're going to be wait six months and sell it to retail rubes who are going to pay 20% plus more than, than the value of bitcoin. And if you're, if you're really smart, you could hedge it. And so some people did, and some people did it unhedged. And then what happened? Well, we know what happened, right? You know, and the premium collapsed. Kaboom, kaboom, kaboom. You know, by the way, I just, just for those who are trading in the audience, I was thinking about five minutes ago that every single time we see the bitcoin price drop from the Open to, you know, around 9:45 the first 15 minutes, it is, it is, it is arguably the single best intraday predictor ever. And it just did it again. But, but, sorry, that's a diversion. But it's just worth noting for people in the audience. I mean it is something that we.
- [50:47]
Scott Melker
All want to put in a low in the morning and then up. Yep.
- [50:49]
Dave
Yeah. But the point that I'm trying to make here is that bitcoin is all about adoption and it's the, it's the digital gold issue and the market cap of gold. I actually think gold got overextended, but it's going to be at 4,000 by the end of the year. I would not be surprised to see it because of all the liquidity gyrations that are going to happen. It really wouldn't surprise me. Maybe 3, 500. I don't know. I think bitcoin will continue to eat into gold now that we're at these points and we'll see how it goes. But when you do these ratios, it's really about adoption. You can't ignore state adoption, you can't ignore nation state adoption, you can't ignore corporate adoption. All of those things are on the supply side, are on the demand side of the equation, which you can see.
- [51:29]
James
From that hash rate that, that there's sovereign adoption happening behind the scenes. That's not out there in the, on the, on the open market. They're mining at, you know, very close to it or at a loss.
- [51:41]
Dave
Right. So it's very, very close to that. So the other piece of this that's really, you know, that, that's kind of mind blowing is every single person in the world of bitcoin that criticizes Plan B and their power law says the same, some variation on the same, the.
- [51:59]
Scott Melker
Same issue, which is Dr. Flow, not power law. Yeah, sorry.
- [52:02]
Dave
Okay. Stock to flow. Exactly that. Stock to flow is only the supply side and you need to. And where the hell is the demand going to come from? And now we're all sitting here at least not all of us. But I'm certainly sitting here and James is certainly sitting here saying well the demand side is here. So all of a sudden you start asking yourself wait a minute, is there some truth to this stock to flow and will the demand, you know, continue to propel it that way? And that to me is a, is, is why it's different. Now that said, you know, I appreciate what, you know what we're saying. I just think that we're going to continue to see money pumping in and so as long as liquidity is pumping in, I just think the money has to place us to find a home. And you're right Mike. There are people if you look at, listen to what Sailor said or forget Jack Mallers who's who, who makes sailors seem, seem more conservative, you know, you know it's, that's just a fact. It's like why am I putting my money if I know that they're going to be inflating money supply by 7 or 8% a year? Why the hell am I putting my money in something paying me 4%? That's a guaranteed locked in loss. That's the answer to your question. Whether you believe it or not. That's the answer to the question.
- [53:08]
Mike
No, there's. Well, there's guarantees in life but we got to show a screen. If you're going to show screens, I'm allowed to show too. And just the fact of course and we all agree with the hash rate but we can argue with as much as possible. I'll be publishing this tomorrow. But no 16/4. The correlation between Bitcoin and stock market 0.66 is the highest ever versus gold. It's zero. This is leverage beta. You can argue with all you want but it's what it has been. Maybe it's changed. It says the same chart syndrome. Here's bitcoin, here's the S P500. I remember I was really bullish bitcoin in the past certainly when people hated it, it wasn't. Now it's everybody loved it, it's widely adopted and it's the highest correlation ever. When it was low correlation in 2020. Yeah I got it but this is just part of the cycles working. My point is if we can get through this year, stock market up, Bitcoin up. That's math. That's what you expect if we get through this year stock market down, Bitcoin up. Now that's a substantial statement that probably flip me. I fully expect that's unlikely. My base case means stock market down bitcoin, down more. We've bounced and now let's see where we go from here. And it's just the fundamentals of what's changed versus what's happened overnight is nothing. We still have tariffs, we still have a Fed who can ease, we still have austerity in this country. We have the most elevated stock market in hundreds of years. That's the only way you can support things like Shiba Inu that are back to like $10 trillion in Dogecoin that are back to like 30 trillion, I'm sorry billion dollars of market cap. Those are going to be hammered at some point.
- [54:29]
Scott Melker
I do have to say Mike, a couple things that like we were talking about last week you mentioned that you thought that 94, 95 was a really key area for bitcoin if we ended up higher. So obviously now we're at, we're at 105. This one actually really caught my attention which is it's so hard now with on stream yard to remove someone's chart and put up another one. Goldman Sachs boosts ibid holdings by 28 as BlackRock's Bitcoin ETF logs longest inflow streak of 2025 so I found this shocking because Goldman's the number one holder of Bitcoin ETF which I had no idea but then the other thing you.
- [55:05]
Dave
And you mentioned, do you want to know why? By the way Scott, I got a.
- [55:08]
Mike
Comment on that though those.
- [55:09]
Dave
Yeah we had my comments but I'm going to tell you the why because I actually understand the why.
- [55:13]
Mike
Go ahead you do the why first.
- [55:15]
Dave
The why is that Goldman and Morgan etc have had massive corporate demand and pension fund demand, insurance company demand for non deliverable forwards and derivative contracts based that are swaps based on bitcoin and they used to use the futures on the CME which is why the futures the CME had the premium and now they realize I bid at a 15 basis point management fee that you know they're making over a percent on these trades so they don't care so they're holding it. So it's not Goldman, it's it's like everyone who says oh it's Goldman thinks it's going on.
- [55:46]
Scott Melker
It's one analyst same as saying it's the same as saying that black rock is buying when you know that they're.
- [55:51]
Dave
Buy understand what does it mean? It's telling you the demand is there for derivatives. And remember something that's really interesting about it that's with a backdrop of stupid capital laws because if you're long bitcoin and you're short bitcoin via swaps. You have to take both sides. As impaired capital, you don't get to offset them. Now, I don't know how they treat IBIT because it's a etf. Maybe it, the haircut there is better. But the truth is, is the reason that this is buying is because it's supporting derivative demand from their customer base. And their customer base is. I don't know enough about Goldman's customer base to know how much of it are retail aggregators versus insurance companies, blah, blah, blah. But that's what that means and that's why the futures premium doesn't exist.
- [56:38]
Scott Melker
But this is, this was going to be the point I was like trying to finish was that we had this long streak of out and we pointed out that it was likely the carry trade unwinding. Now you're getting inflows and you see that Goldman Sachs is the largest holder. This is kind of. Isn't this sort of the opposite side of that?
- [56:54]
Mike
Exactly, exactly. That's the key thing that I want to emphasize. And years ago, five, six years ago, when I kept pointing out loads of us are really bullish Bitcoin, it was the questions I got from entities like that. Some of the most significant banks and financial economists on the planet. Remember I deal in the Bloomberg terminal. You want to line up and criticize me? Sorry, you got to get in line. They start first. They were asking me the questions, what is this space? What's going on? Now I get the opposite. I see the headlines of how excited they are about it. When at certain extreme levels, it's the same thing Goldman was placed against on that headline of crude oil going 153 years ago. That was one person, Jeff Curry. I know Jeff. He's a friend. He turned out to be wrong. It turned out to be opposite. His point is when it hits the tape like that and it's already done it, beware.
- [57:42]
Scott Melker
Any thoughts on that, Dave or James?
- [57:47]
James
It's just, look, I think we, sometimes we get into these conversations because we have a longer timeline of investment horizon than the typical person. And my timeline is, my horizon for investment is very long. And so I'm not worried about these, you know, 20 or 30 drawdowns or even another 50 drawdown because it only produces opportunity for me. I'm not, I, I'm not worried about the next six to eight weeks. I'm concerned. I'm, I am tuned into it because it provides opportunity. But that's, that's My opinion, I mean.
- [58:30]
Dave
My opinion is that the, the, and I just asked Grok this question. We'll see if I get an answer. But my, my gut tells me that the average time horizon for the swaps that are part of these ETF inflows that I believe are going on is multi year. And, and, and that matters because I think that you're talking about long term holders that this, that the people moving into. And Matt Hogan said says this as well by the way. So it's like, and, and he has a much better seat for understanding this than any of the four of us do. I think that you're talking about. Okay, hold on. It's, it's Grok is actually answering my, my question here. It's somewhere between, you know, whatever equities. Yeah, yeah, it's, it's multi year. The average is probably between one and a half and two years is, is, is the likely answer. And so you're talking about long term position being hedged which is not nearly as prone to the inflow outflow nonsense. And the reason we saw the carry trade unwinding was because they were, we know what was happening. There was this, they were all in futures. And so now it's, it's, it's pulling into this. So I think that it's just more long term demand is what's been driving this market. So it's not, it's not crazy. I mean we've all said it's been spot led. That's the reason. Now what will be really interesting. Interesting is to see when we start getting indexes in ETFs and we start getting more interest in other things. But right now I would say the institutional interest in everything other than Bitcoin in crypto is close to negligible. But the institutional interest in Bitcoin is the beginnings of a tidal wave. I mean it feels like a tsunami. Tsunami. And tsunamis don't end when you're, when, when there's no froth. That, that's really the point that I, I'll make. It's really that. So that's why I think time horizons on buying. Because if in fact these were all short term traders buying this stuff and that's why it was expanding.
- [60:30]
James
Yeah.
- [60:30]
Dave
Then Mike would be right. Then it's absolutely prone to, oh God, the first twitch, we, we need to drop it. But it's, you know, these, every time you talk about the size of the corrections, the size of the corrections in Bitcoin, if you normalized it based upon the adoption metrics it was from when it got incredibly frothy. Every other one of these, quote four year cycles got very, very frothy. Froth in bitcoin looks like the same level of froth in bitcoin would be somewhere in the neighborhood of the 444,000 that Josh Mann talked about. That's frothy, you know, 100 to 150, 000, 130, 000, whatever. That's not froth. And it's just, it's just based upon adoption metrics. It's just, it's just, that's just it. Now, does that mean it can't drop? Of course it could drop.
- [61:19]
Scott Melker
Yeah. I, I'm on your. I, I'm with you that this is just getting started when I take a look at bitcoin dominance here. So just. I know we're about to wrap, but this was the first time that we saw bitcoin go up meaningfully and all coins go up meaningfully more in this cycle, which to me is a third to sixth inning phenomenon of a bitcoin bull run and not a ninth inning phenomenon of a bitcoin bull run. When eth and soul and all those are looking really frothy again, I think that will start to be a signal, Dave, regardless of the price of bitcoin, we're just for the first time seeing anybody even get interested in these other assets beyond bitcoin and crypto right now. So it does feel very beginning, beginning more than an end. We literally have not seen money move into the larger cap altcoins this entire cycle meaningfully like that. So, you know, Mike, you might disagree, I don't know. But it feels like now we're going to start to see some actual FOMO and froth when Ethereum runs and then all the things on Ethereum start running with it.
- [62:23]
Mike
Be careful saying when. When. You should say if I make the mistake a lot. I think, I think the whole crypto space will be fine as long as the stock market goes up and I'll stick with this. Bitcoin is more likely to go down if the stock market goes down. And I think that's the risk for this year.
- [62:40]
Scott Melker
I actually think everybody agrees with that in a vacuum. Just the expectation of how much the stock market will go down and when.
- [62:48]
Mike
The number one measure of liquidity is when we talk about liquidity. Let's not forget what creates liquidity. Two times GDP is US Stock market. We can only have said that once in history back in 1930s, I know Japan, they said it for a while. Didn't work.
- [63:02]
Scott Melker
I know it's.
- [63:02]
Mike
Yeah, well, Japan 1989. So those of us who lived it, I mean I started in business trading with Japanese right at the peak in 1988. Well a little bit before.
- [63:10]
Scott Melker
So I just, I, you know, I, I know that it's only a small sample size here, but the way that bitcoin has performed since Liberation Day versus stocks, I know that it strap like that long has been surprising to me. And the fact that on the tail end of that we're seeing now the speculation in crypto come back. It just feels like it's early cycle. But you know, I will give you, I will give you the if and not the win. I think that's fair. Guys, another incredible show. 1006. Sorry, didn't mean to keep you guys. I wish it was just three hours long. Sorry, I'm long. Yeah, well we all are to some degree depending on the topic. But guys, give Mike, Dave, James, of course a follow. Incredible that now like this show is like 3x the size of all all of my other shows. And like I've said before, I was just in Dubai now even in Dubai where you think it's a bunch of all coiners. Only thing I hear about is macro Monday. It's like I literally do nothing else. It's the only.
- [64:13]
James
No, we appreciate it for a living.
- [64:14]
Scott Melker
Have macro Monday. But everybody loves you guys so thank you so much and we will see all of you next Monday. Bye everyone.