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- [00:01]
A
Well, good morning, everyone. I hope everyone had a great weekend. Here we are on Monday morning and we titled this because Ethereum breaking out versus bitcoin certainly looks that way on the chart. However, whatever view you look at, I look at the.03 ratio level as important it had failed. That it is now there, you know, this is happening as Ethereum is. Is close to retaking the 2000 level amidst more commentary of Bit mine buying more. It's funny, we talk about Saylor all the time on this show. We don't talk about Tom Lee enough. I actually am more scared by that than I am by the other. But I think the bigger story here really is, is this a signal for what's happening in the entirety of the crypto ecosystem? And I'm curious what people think. I mean, look, I think in the summer I take everything with a grain of salt because we don't really, you know, lots of summer movements are small. You know, I just remember the summer of 17. It was interesting to say the least. Before bitcoin took off, we certainly saw some pretty volatile moves. And, you know, we're not seeing a lot of volatility right now. I mean, to us, these moves look big because you're starved for any news to talk about. But the truth is, is the moves are pretty small on a lot of these charts and, and what's going on in a lot of these markets. But, you know, it's. It's this at the same time as, you know, green shoots and certain, believe it or not, memes. You know, Scott showed a story this morning. You know, Shiba Inu up 22%. Hey, we're back. And it's like, okay, well, you know, maybe. Although I feel like the end of which was. Which was the movie. I kept trying to remember which was the movie where, oh, I think it was Coming to America. Eddie Murphy did, where Randolph and Murder Merduke were in the. Or in the dumpster and he threw some money at them and they're back. You know, it's one of those deals. I mean, I, I think it's kind of like that, but, you know, it, it is definitely more constructive feeling out there and, you know, in terms of. Of bitcoin in particular and other assets. And that's despite the chatter over BIP110 know, Ethereum. The chatter is about institutionalization and people building more and more things in crypto. And, and I'm seeing more and more stories, you know, this, this morning, more on things like, you know, Bit Tensor and other things. So we're seeing more. So anyway, what's your take on it, William? I was trying to trigger you and I see your hand, so go for it.
- [02:37]
B
Yeah, it's a good setup, David. It's kind of ironic because I never thought I'd get excited seeing ETH at 2000 again, which is a level it had two months ago, but also it had more than five years ago, April 2021. Now, I wouldn't count my chickens yet because we teased that level before. I really want to blow it and go way past it. In terms of the summer, it's interesting. The last high did happen at the end of August of last year and the previous all time high was around the July framework time frame. I'm talking about July 2021. More or less close to that. No, sorry, it was November, but the summer proceeding was quite bullish. Yeah, maybe, maybe the summer is not going to bring anything. Maybe it would. But this all points to the fact that obviously I don't have to explain myself, but Ethereum is vastly, vastly mispriced at the moment.
- [03:56]
A
So I can pull on that string. But I see Brian wants to go. So Brian, what are your thoughts? And then. And then Adam.
- [04:03]
C
Morning.
- [04:05]
D
Good morning.
- [04:05]
C
Yeah, so BTC versus eth. I was kind of chalking it up to within the realm of normal volatility. I think MSTR did not buy BTC for the fifth week in a row. So maybe there is more treasury support for eth. Obviously lots of commentary on Robinhood chain. A lot of people saying this is the biggest thing for Ethereum since bitmind Immersion came along. My first thought was like the recent strength versus Bitcoin was maybe around the Clarity Act. And so yeah, I think like this week is a key week for us. We've got this week and next to get it out of the Senate. I do think like BTC has regulatory clarity, so I do think it's probably more impactful for eth. So maybe this is just bets around, you know, what could potentially happen with clarity. And it does feel like there's more upside if it does somehow pass versus downside if it doesn't.
- [05:00]
A
Yeah, I think that's. I guess we'll see. I mean, we'll, we'll get into clarity a bit more. I will. You guys will get to hear me rant. But I saw Adam and then Andre.
- [05:12]
E
Yeah, I just wanted to, if, if some of you might not be tracking it. But one of the things that's kind of for, you know, ETH holders, NFT holders on ETH this week we had Adam at Tokenworks releases kind of Gotcha game and Adam has released a bunch of stuff on Ethereum that a lot of people are like, wow, Adam, you know, he would, some people call him a serial rugger, some people think he's just a, an interesting dev. I like the guy, he's a good guy for me. But, but this is really, it's really taken off. It gives something, it gives people something to do with their NFTs. It's kind of, it's a gotcha game in the same way it's like a claw game, like these Pokemon games, gotcha games that you might have seen where you can put in your nft, put in a little bit of ETH and you basically get polls at the, at the, at the lever. Right. And the, the functionality which he built and did, which hadn't been necessarily done before on chain, is this kind of immediate buyback mechanism which really the Gotcha games all need to be kind of like have this kind of virality to it and, and he did it in an on chain way, which is pretty interesting. And I think, you know, for a lot of ETH holders and certainly the NFT community is very excited about this and of course it's got some mechanics that are purely Ponzi esque and really it runs out I think in like 10 days. This kind of token, tokenomics thing is going to kind of run out where it could go very badly in about 10 days. But we have about 10 days more of kind of excitement is the way I look at it. So just be aware of kind of what's happening on the timeline. Regards to that. It's kind of the hottest thing on Ethereum right now.
- [06:55]
B
Are you talking about FWA fun? Correct? Exactly, FWA fun. And I heard that in the first few days or hours it consumed about 8% of the gas of all of the Ethereum gas. So definitely the activity is.
- [07:12]
E
Yeah, I'm actually surprised it's that low. Right? Yeah. When something goes crazy like this on Ethereum where there's real activity on the chain, it actually just reminds me how much money is on Ethereum in relation to Solana. And everybody know I'm a, I'm a big Solana bull as well, but. And I do think users are on Solana, but big money is on Ethereum. It's a completely different thing, right, where the average user on solana might have 200 bucks. You know, there are, you know, deca millionaires on ETH just looking for something to do with their ETH and with their, you know, punk holdings and stuff. And so are always very willing to support kind of creative new Ponzis on Ethereum. So yeah, it's just one of those things that can create a lot of activity on the chain, a lot of excitement on the chain for sure.
- [08:03]
A
The question is, can it spawn a, you know, it. Could it spawn the narrative, you know, I don't know, Defi Summer, nft, this, whatever. Could it spawn that kind of bull market in all this crap?
- [08:15]
E
I mean, you know, I don't think NFTs are ever going to go to anything like the kind of craziness of 21, but I do think people are looking for something to do with this. You know, whether you want to call it an asset class or collectible class, people are looking for new fun things to do with it. And you know, I think lending and stuff. When I talk to my big NFT friends 21, 22, they're like, oh man, if we only had lending when we got lending.
- [08:40]
C
Right.
- [08:40]
E
But, but we, you know, but that only goes so far and it turns out to be a way that, you know, big whales kind of dump their NFT collections and stuff. And so this is just kind of an. Yeah, this is another kind of natural extension of what's happening in kind of the entire collectible space. Happening with Pokemon, happening with all the sports cards and stuff. So it was only a matter of time. I mean, honest, to be honest, like we were working in my, in my company, we just never really got to that mechanism of how to get the buybacks to work on chain. He did a really novel kind of, you know, simplistic and I call it elegant way of doing it. And he's winning right now for sure, 100%. It's really a fantastic product.
- [09:22]
A
Cool. Andre, I saw your hand next.
- [09:26]
F
Yes, thank you. Good morning.
- [09:27]
A
Happy Monday.
- [09:29]
F
Yeah, I think ETH has been outperforming since June.
- [09:33]
C
Right.
- [09:33]
F
And I just want to highlight in terms of flows, maybe two things or three things. So first we actually saw two consecutive weeks of higher net inflows into global ETH ETPs relative to Bitcoin ETPs. That was quite remarkable. And I think the one month flow figure is actually positive for ETH and negative for Bitcoin ETPs. So that was quite remarkable. You can see actually in terms of investor participation, investor interest, that there's more interest for Ether right now than Bitcoin. And that might explain this outperformance as well. Right. Apart from onchain activity. But I also also thought that in terms of Flows. I, I, I think it's really interesting to see strong outflows from semiconductor ETFs right. Like SMH and inflows into crypto ETPs. Right. And I also think it's interesting to see that Bitcoin has, has been outperforming semis essentially since the peak. Right. And I, I posted the chart this morning like the intraday performance and the socks.
- [10:35]
G
Right.
- [10:35]
F
The semiconductor index since Semis peaked on 22 June last, last month and it's more than 20 percentage points right in our performance. So I think that that was quite remarkable and I think the macro is still relatively bearish. Talking about the AI trade unwind like what's happening in straight Hormuz, sovereign bond yields going higher, hyperscalers continuing to underperform because of tightening credit conditions, et cetera, et cetera. But I think the crypto specific fundamentals, they've actually started improving over the past months. Like all ETP flows have re accelerated. Treasury company demand has likely bottomed. Right. Strategy has stabilized, long term holder supply at new all time highs. Convergence between tradfi and cryptos accelerating, et cetera, et cetera. So I think that's this kind of dichotomy, right? Bearish macro but like bullish coin specific factors.
- [11:33]
A
Well, I mean it's almost impossible to argue with that. Right. You know it, you know, when you talk about the performance, I mean bitcoin bottomed early and you know some people will say well it led, it's leading the bottom. I mean I personally think that you know bitcoin is bouncing around in this, this sort of like compressed range is, it's building that bottom, you know and it's a process. Right. You know, semis got a bit ahead. I mean when you see things like Micron with doing a 20x it's like okay, well you know people are going to take profits. I mean that sort of thing is, is, is pretty classic and I don't think that the, the semi trade is over. I think that this, the notion that the AI, that there's, that spending for AI is going to decelerate, I think is probably wrong. But you know, we'll see. I mean markets are markets. I mean look when SpaceX IPO'd I and it kept running up, I said well it's gonna, I'll be looking at it when it gets below its IPO price after the unlocks are there to figure out where it's gonna be. You know these things are normal market fluctuations. That wasn't a particularly brave nor Nor fascinating, you know, forecast. That's typically what happens. And people, even though it typically happens, get, you know, basically, you know, fall for it and there are certain things that occur. I think that when you see Bitcoin, it's up to what it and Ethereum, the narratives do matter. The bitcoin narrative is about, you know, will it get close back to its power law, you know, adoption on its track to digital gold, yes or no? Or is it fundamentally broken? If it really is that binary? If you think Bitcoin is fundamentally broken, sure, short it. Otherwise if it's not fundamentally broken, it has a pretty big rally in the not so distant future. It really is that binary. Ethereum, if you believe it's going to be the basis for the crypto economy, as William does, then it's underpriced, right? If you believe it is the first, but it's the Betamax of crypto and will eventually fade, well then short it. Personally, I believe neither. I think Ethereum is kind of in the middle of those two things, but I'm still moderately constructive on it by that. But that's really the narrative here, right? And we're in the summer and people look, we have far fewer people. One of the greatest indicators of, of how little retail cares is the, is just the listenership on all these, these crypto shows. The number of people on this space compared to, you know, six months ago, it's, it's, it's not quite a tenth, but can be that way. And, and that's because people are like, I don't care. Well, people don't care until number has already gone up a significant amount. Just remember that number go up is great advertising. We talk about that. But that's not Bitcoin to you know, 70,000, that's Bitcoin up over a hundred. That's not Ethereum at 2000, that's Ethereum at 2500 toward 3000. Those are big moves. And when that happens, people will start getting excited again. Ethereum starts making a run at an all time high, you will have enormous attention. Right. But right now it's, you know, it's just different. And that's something that people always ignore. It frustrates me to some degree how, you know, you listen to people talking about what has happened as why it will continue to happen as opposed to trying to predict what is, is the most likely scenario. Right. I mean, William, I mean I was trying to trigger you with that, with that binary on Ethereum. I'm glad you raised your hand. So do you look at it.
- [15:24]
B
No, yeah, I want to comment, but not on that necessarily. I just leave it alone. But the point that you made, which is that the viewership on the podcasts and so on is down. Not only that, but this is all us, the industry, talking to each other. So I don't think it moves the needle so much to the retail and to the market at large. It's a bit of a catch 22 because, yeah, higher prices are going to get more headlines outside of the crypto media, which then starts the ball rolling in terms of attention. But if you don't have that right now, we are still talking to each other, we're not talking to the market at large. And for those prices to move, you want to attract a broader segment of the world, not just the ones that are die hard like us. And that's what's missing right now. We have retreated to talking to each other instead of trying to expand the pie and to expand the reach and to reach other than just us.
- [16:32]
A
Well, yes, that is true, but I mean, look, I'll be at dinner tomorrow night with a bunch of my tradfi friends on the board of Security Traders and I can guarantee you that everyone's talking about tokenization. So Ian Weisberger did a post this morning on LinkedIn when he cited a statistic that's remarkable, which is more than half of the trading volume on hyperliquid was in non crypto assets. It was, you know, their obvious representation, whether that's oil, silver, gold, you know, whatever. It's telling you something. The market is telling you that there are crypto assets and there's crypto technologies. The crypto technology is winning full stop. No question about it. Some crypto assets will win, some will lose. That is normal. But if you debated in 2000, you know, when in the bet after the dot com bubble crashed, if you debated, and there were people who said this Internet thing is a fad. I mean, famously, you know, Krugman said it, you know, the fax machine comment. But people debated what it did, but what it was doing was changing business models everywhere. And, and there were some of the greatest generational wealth of this generation was created by people intelligently understanding what the Internet of information was going to do in industries, buying companies that both created that tech as well as used it. The Internet of Money, which is what crypto is, with all due respect, with plagiarizing, Mark Yusko is going to have just as big an effect. And we are seeing it play out. We have not seen it play out in the assets that will ultimately win yet. But that creates opportunity. Right. So to me, that's what we're looking at. And, and you know, I don't know, William, I assume when you say massively mispriced in Ethereum, I assume that's what you're talking about, right?
- [18:36]
B
Yeah. Now we need to reach a broader segment of the population. What you described is maybe the second layer, those adopters at the enterprise level and the institutional level. And that's been a renewed area of attention for Ethereum, specifically with these three new organizations that sharplink, Joe Lubin and bitmind have funded. That was specifically a response to, to the Ethereum foundation neglect of the institution's market. So we're going to see an uptick as a result of that. But I think I want to see more of the regular people get excited again. I mean you can call them retail and we need more apps, we need more consumer apps. I mean this one that was just mentioned, FWA fan. Yeah. It's attempting to bring a little bit more excitement back into the NFT space, which was a bit of a broader kind of application. I see a lot of new apps in the prediction markets that are like a second generation like Pascal. Maybe you've seen the announcement last week it was funded by usv. It's, it's, it's a, it's another generation of a prediction market. It's app.pascal, trade. You can connect your wallet to it and, and then trade. And they are going after the poly markets and the, and the culture of the world with the, with, with a more crypto native but still not geeky kind of interface. So I want to, we're going to see more of these new generation of apps that will eventually bring more excitement from the masses and that's going to be important.
- [20:37]
A
Well, I mean I'm of two minds of this. On the one side, the best apps people have no idea whether it's crypto or not. They don't really give a crap. I mean you use your phone, you do what you're doing and whatever. I mean, so I don't know, the technology matters, the UX absolutely matters. You know, on that, on the other hand, the technology, you know, that's what, what I think is, is going on. I mean, and we're seeing it with the debate on the Clarity Act. I mean we, we literally have seen otherwise. Non, I mean we're not talking about morons here. I mean, you know, we're seeing Congress people and senators saying some of the dumbest things I've actually ever seen them. And that's saying something that is not a high bar. Right. We, we've seen politicians say stupid things, but when, when Chris Murphy says he's against to clarity and basically because, you know, his, his party's rule allowed Trump to make a lot of money in meme coins and so now he doesn't want any regulation. You know, it's like you're seeing people, you know, just piss on themselves and make themselves look dumb now. Their base won't care, you know, until they do. And at the same time, the entire financial industry is essentially, you know, even, say, even Jamie Dimon came out. You know, today. It's like this whole debate is, is kind of showing cracks in the coalition and at some point the technology just becomes too big to ignore. And it's very, very close to that level now. You know, we may have another year or two of more hand wringing, but I don't believe we go into 2028 election cycle without regulatory clarity. I mean, I'm very convinced about that. I have no idea what will happen, whether it'll be after the midterms and the Democrats want to take it away as an issue for 28. I don't know how it's going to play out. But some of the things being said are just really dumb because the financial industry is already moving in hyperdrive to adopt a lot of these technologies that we are. That is for sure. Nobody cares about any of that. So grain. I see, I see you're up here. You, you want to defend the, the notion of. Completely logical notion in my mind of, of Sailor buying back STRC at a massive discount.
- [22:51]
B
Well, well.
- [22:52]
A
While preserving his dividend coverage.
- [22:54]
G
Well, before going to that. Look, we, we could all hope that retail comes in, but let's be realistic. Saylor bought $7 billion worth of Bitcoin this year in the fixed income market. People like, what the hell are you talking about, fixed income market? He bought $7 billion worth of STRC, right? He issued $7 billion worth of shares to go buy $7 billion worth of Bitcoin. I say the same thing on spaces all the time. Does anybody think that 10,000 millionaires are going to wake up this week or next week or pick whatever week you want and they're all of a sudden going to buy one bitcoin each? Nah, it ain't happening. And do I think that those millionaires are going to use prediction markets? Nah, I don't think so. They're just not going to do it. Somebody's like, well, Strategy hasn't bought bitcoin in six weeks. I'm like, oh yeah, you're right. They only bought 176,000 bitcoins this past year. They've only bought 650,000 bitcoin since. Since basically the start of the Bitcoin ETFs in January 1st, 2024. Right at the ending of January, sorry, the ending of December of 2023, Strategy had less than 200,000 bitcoins. We have somebody that bought 650,000 bitcoins. Let's do the math. 200,000 to where we are today. We're approximately 843,000. They bought approximately 650,000 bitcoins in two and a half years. I don't think that 650,000 people, we're going to wake up and decide, oh, I'm going to go buy one full bitcoin. Nah, it's not going to happen. And how does, where does this happen? It happens because it went into equity. That was easy to buy, low friction and it went in also to create the prep market to go after fixed income. That's the adoption. And those people aren't typically aren't the traders. So do I think it's good that Strategy decided to buy back Stretch? Yeah, I do. I think he's going to be the biggest buyer of Stretch. I think that's great. But I don't know, maybe I just made up all those statistics.
- [25:02]
A
Well, no, I mean, look, but, but does anyone under. When we talk about Ethereum breaking out versus Bitcoin, the fact that Tom Lee is still buying and strategies stop buying that relative. I think that, that, that explains the relative performance. I mean, yeah, we can always look at narratives as to why. But, but I mean, you know, it is what it is. I mean, does that matter? Anyway, I see Andre and then Jamie,
- [25:31]
F
I think it makes sense. I mean I just made that observation with respect to ETP flows. You can also see it in relative treasury company flows. But I'm also siding with, with grain of salt. I think what actually makes me most bullish or what makes me really bullish is institutional demand. So if you combine both ETP flows and treasury company demand for bitcoin, I mean it's been very depressed. It's been at a four year low.
- [26:03]
C
Right.
- [26:03]
F
In terms of one month growth rate because Saylor hasn't been buying bitcoin.
- [26:08]
H
Right.
- [26:08]
F
He has even been selling bitcoin and so on. Right. We had significant ETP outflows and on so very depressed four year low. Essentially the lowest since FTX blew up late 2022. And now we are re accelerating because strategy is stabilizing. Right. No force liquidation risks anymore.
- [26:28]
G
Right.
- [26:29]
F
ETP flows are re accelerating and so I think it's super asymmetric from you, right?
- [26:37]
A
Yeah, well that's been my thesis for a while. I mean you know we, we'll see how things develop on the macro and what goes on over the, over the, as the quote four year cycle comes to its, its end and we see the next one. I mean, you know, whatever. But anyway Jamie, you've been on, you know, doing the yeoman work on a lot of these spaces and dealing with a lot of this crap. What are your thoughts this morning?
- [26:59]
I
Well, we've been talking about the MSTR and I, I've kind of been doing a dive. I, I read the 8K today. You know I wasn't surprised when they issued the shares. They, they increased the, the reserves by about 540 million. But if you look at it to me it's pretty simple. They have, the first debt tranche is due September 2027. It's about a billion dollars. So they're, they're, they have 147 million of obligations but then they're pre funding the rest of the debt. And so that's where you know you get to the 450 million is what I see for all of the debt based on their put dates. So right now they raised 500 and basically 50 million, that's another 100 million over what they need. So they there in my opinion this isn't, this is something that for the next year until the first debt trust they're going to have to do above and beyond that. They can look for opportunity to buy some bitcoin or to retire some more preferreds like they did today. But this should be expected. This is what they need to do to pre fund and to maintain their obligations. It's pretty clear to me that's what they're doing and I think it's a great idea by the way and if they can get to that point by the way, you know this is kind of like the first target. You know, potentially if they have the 24 months in reserves and they can get maybe a higher rating potentially to then refinance the rest of that debt, it could be a whole new directional for MSTR and put them in a better position as far as health and ratings with the market.
- [28:33]
A
Well, I mean look it is a chicken and egg thing here but the truth is if Bitcoin starts To obey the power law or any other way of, of looking at Bitcoin. If it rallies significantly and we see new all time highs, strategy is going to outperform. If Bitcoin stays at these levels or drops, strategy is going to languish. And I underperform. I mean you can't, it is as simple the, the thing that's happening now is there if anything slightly overreacting but doing what they feel they need to do because they made such a stupid mistake of effectively leaving themselves exposed. So they, oh in a, in a very simple way the market perceived. Whether or not they did or not doesn't matter. The market perceived that when they bought back that person third trunch a few weeks ago or a couple months ago or whatever it was, it feels like it was a long time ago even though I know it wasn't. The market perceived that they were over levered and, and all the speculation of doom loops came out that that's what happened and, and that's what reflected in the bitcoin price. That's why bitcoin went from the mid-70s as it was starting to break out down to you know, piercing 60 and bounced off the 200 week moving average. That's the reason. And so you know, people were terrified and so now they're, they're basically every week you're hearing well they're not buying bitcoin but it's still going up. And oh by the way there's, their cash position is strong and there's no, no reason to be talking about doom loops anymore. And so to me the longer we go without hearing micro strategy as the story for bitcoin, the more bullish it is. But make no mistake, I mean that was wrong what they did. They know that was a mistake and it hurt Bitcoin and MicroStrategy's capital stack. And so now they're on, they're doing the opposite now. And now, now I think what they're doing is responsible but it's still dependent upon bitcoin. That's the bet. Brian and then Andre.
- [30:32]
C
Yeah, this doesn't impact the long term thesis but I think that this week is key to see whether or not we can keep this market momentum going. I think it is both crypto specific and more macro related. I'm sure we'll talk about it. But on crypto specific obviously any progress on clarity will be vitally important, much less important. But MicroStrategy reports Thursday after the bell and then as far as like the non crypto related risks and Catalysts. We've got how things will play out in the Middle East. We have big tech earnings obviously Google reported last week and wasn't good enough. They reported their first negative free cash flow number in quarter in company history. We've got the Fed meeting where the markets are currently placing a 33% chance of a hike. So I think we got a lot of things that could potentially trip this up, but some big, big things that could go our way as well.
- [31:24]
A
Yeah, I'm sorry, I have to laugh. I mean if, if I were trading on prediction markets, that'd be the one that I would be trading on. The, the odds I think of the Fed hiking are, well, let's just say not high. I could, I, I can't imagine that that will occur. It's just, it's people who don't understand. I mean it Kevin wars. So the only way that the Fed hikes is with, with a veto from the Fed chair, which has literally never happened. So I mean it could, I suppose. I mean the Fed governors could all decide to override the chair. I'm not sure what, what the hell that would mean, but I think that's basically signaling the, the death of the Federal Reserve as an institution if that occurred. But that's the only way it could happen. I mean I would tell you, I saw. First of all, Andre, was that a new hand or an old hand? I'm a. I saw you threw up the laughing emoji at the same time I laughed out loud. I mean you think there's any chance that they're gonna hike?
- [32:25]
H
I mean, I don't see it. Mainly because it's just so early in Kevin Warsh's new placement at the Fed and doing this at the state of things would be really crazy. I also think they're just trying to implement entire new process to analyze data to get something accurate. And with the way that government agencies move, I am quite skeptical to think that their outlook is that much more refined than it was was by the last Fed meeting. Kevin Warsh has also been pretty quiet in this stage. So I think the, the shock to the system of them just to come out and raise. I just don't anticipate that. I do anticipate maybe we do get a little bit more outlook and, and some signaling to that if conditions really aware worsen on the inflation side. But I just don't see it right now. And I, I was just more laughing at like the, all of the extenuating circumstances that we have to analyze and how much this recent run of eth to 2k rests on everything going according to plan.
- [33:40]
A
Well, I mean look, I, I personally when people say this is an important week, I think that saying this is an important week in the middle of July, in the dead middle of the summer, like you know, a week before most of Europe goes on vacation and etc, that's just nuts. I'm sorry, Brian, I mean I'm not calling you nuts, but I think it's nuts to, to think, I think the Clarity act is, I mean look, it is political footballs. Who knows? This is like the debt ceiling, you know, I don't know if it's posturing or what's going on. I do know, I think that it will be very unlikely that, that I think that this, this is something that doesn't need to happen before the recess to get done. But this is a game of chicken and it's stupid. The, I don't think very many people think it's smart for the US to stay with no regulation on digital assets. I think that, that, that is a, a morally bankrupt position is, it is a, you know, intellectually bankrupt position even worse. And so it's going to get harder and harder to do. But the politics are the politics and they're trying. They don't want to give Trump a win and they certainly don't want to allow him to benefit personally from it. So that, that's what's going on here. But will it actually happen? Yeah, it will happen, but it may not happen for another year or two. You know, we'll see. Anyway, David, you had your hand up. So sorry. You've been patient. Yeah, Dave, I was just going to say that, you know, following on the precedent that Kevin Warsh has set in
- [35:07]
H
the first meeting back in June, he'll
- [35:09]
A
probably come out this time and to say he's forming a committee to consider whether to raise interest rates, I doubt it. Actually. I think he may say he's forming a committee to understand what the next generation of rates should be. I mean explicitly. But I. Look, the reason to raise rates is if the economy, if consumer demand is driving inflation, right. And, or wage push inflation is happening. If unions are, are demanding higher wages but wages relative to GDP are pushing plumbing the lows. They're not. If you look at the most recent retail sales report, retail sales were up 7%, consumer incomes up only 3. You know, any benefit people got from tax refunds in the first half is exhausted. So you know, I don't think consumer, the consumer driving inflation is something you need to worry About I think you need to look more credit card delinquencies starting to spike. Well, that's right. And so do you. You re that, that, that's cut rates, that's not raise rates. That's my point.
- [36:17]
H
Yep.
- [36:18]
A
And, and the other thing he's doing, and he's really explicit, they're going to talk about the measures of inflation that matter. I mean, you know, oil is obviously a huge driver of influence inflation. But the Fed, as much as powerful as they are, they don't really have a whole lot of impact on oil prices. Like you know, to some degree. I guess if you cut rates maybe people can afford to speculate more and spend more, you know, invest more in new oil exploration. But we don't have an oil supply problem, we have an oil delivery problem. Right. That's what's going on here. So I don't see how the Fed has any impact on that. That, I mean that's just. And so, and, and if I, and by the way, I don't think war, I'm saying it this way because I think war gets all this stuff and that's why he's, he's trying to change the methodology of how they're looking at inflation. Right. Which of course will, you know, this has been done before and it was done before under Reagan. Right. In the beginning of his term and with very predictable results. And you can go back and look at the history, there's you know, hedonics and substitution effects and the redefinition of cpi. I mean that was all done for a specific reason and it presaged the beginnings of the biggest bull market in history. Now we're in a different situation now. Markets are at all time highs. So I'm not saying that, I'm not saying that, that he's trying to spur that. I'm thinking he just wants to defend the wealth effect and leave it moving. Right.
- [37:45]
H
Yep.
- [37:45]
A
I think Mike or Brian, I couldn't tell who was first grain or.
- [37:50]
G
Yeah, I'll be quick. So the CME futures rollover this, it's a, it's always the last week of every month. So you tend to see volatility. And so my view is that in, in any of the rollover weeks, which is the last full week of the month, is that as long as the price of bitcoin stays stable that that's the best indicator that they're the things are looking good. You also want it to stay in, in contango instead of backwardation. So you always want the, the next month's future price of Bitcoin to be higher than the current month, whereas backwardation is the reverse of that and typically not bullish. The other thing that people don't see is that six months after the spot Bitcoin ETFs were approved. So if you look at the CME future volumes on open interest, it completely shifted a completely different regime. And I think that's why again hoping that retail comes in to buy Bitcoin, I think it's more the, the large aggregators, whether it's MSTR or bit mine for Ethereum, I think that now it's going to be the corporate wrappers are going to be what drives the price of these, of coins. And for, I mean it's even true for, I think for Ethereum. So I think that's the way we see this play out. I think that the retail will come in through that.
- [39:06]
A
Well, look, retail gets interesting when prices start moving higher. Right. You know, significantly. You know, retail is always lagging. They're not, they're not leading in most financial assets. Now in crypto it was mostly retail, but it depends on in the beginning and so it was exclusively retail. When people compare, and I'm going to use the word even though it makes, it hurts me when people compare this cycle to, to past cycles, the biggest single difference is in past cycles it was all retail and so everything was exaggerated. Now it's not. And so there's a lot of that going on.
- [39:43]
I
Yeah.
- [39:43]
G
And so I'll give you a couple things that don't come up on spaces that is different. Prior to tether getting large enough, most of the crypto traders were coin market margined. So if they wanted to trade bitcoin, they post bitcoin as collateral and you have a feedback loop as the price goes higher, they have more equity. They could then buy more Bitcoin. On the flip side, you would get long liquidations and short squeezes. And that happened once they went to stablecoin margined positions. You saw that a lot of volatility just, just evaporated from the market. So that's why we used to see that bitcoin could change, have a 10 swing, it can go 5% up and 5% down in one day and that'd be a 10 swing. And that's largely, you know, in the history books. So that's why things are fundamentally different now. And I think that's why we have these, these large buyers that are coming in and aggregating that, that, that sentiment and buying it through different wrappers. So I think that as the. As the market matures, I'm bullish for it, and I think that's where we're going to be.
- [40:46]
A
I mean, it's funny you mentioned that the coin margin, which of course was started by Bitmex, which is now shuttering this week. And we're seeing things that generally play out at bottoms of cycles. Bitmex closing, Bitmart closing. I forgot which bitcoin treasury company announced a liquidation last week. We're seeing those things happening, but we're seeing them happen without forced selling. And that's a big difference between.
- [41:17]
G
Yeah, Dave. Dave, I got a conspiracy theory for you here on Bitmex. You ready for this one?
- [41:22]
A
Okay, let's hear it.
- [41:23]
G
So. So Bitmix, one of the things that they did awesome was they had a. They had a bitcoin insurance fund that peaked at around 35,000 bitcoin. So I was like, oh, Bitmex is closing down. What happens to those 35,000? Or it must be 40,000 bitcoins or 40, 35,000 bitcoins now. What happens to those bitcoin? Who owns those? So I log back, you know, hit AI. What happened to BitMEX's 35? They're like, oh, that's a historical artifact. There's only 3,600. I'm like, 3,600. Where did the other 90% of these bitcoins go to? Oh, unknown. And. And I spent, like, I don't know, seven minutes researching this. And everybody's like, yeah, who gives a. It's like, wow, 30,000 bitcoin coins evaporate and nobody cares. I was like. And that was one of the coolest things. The reason why that insurance fund existed was that if somebody was offside in their trade and their liquidation algorithm did not work correctly, you would be paid out of the fund. So you were long. And the short guys got squeezed, but for some reason, they weren't able to cover that. They would then. It was a great idea. They would then pay you off on this. So I thought that was a great thing that they had built into the system. But now that 90% of those bitcoins have just evaporated, were they not real in the. In the first place? Or where did they go? Or were all the traders so terrible on it that it just, you know, disappeared?
- [42:48]
D
I don't know.
- [42:48]
G
Nobody's talking about. Except for me. Maybe it just doesn't know. Maybe Nobody cares about 30,000 Bitcoin.
- [42:53]
A
I don't know. Well, I mean, I have no idea. I would Imagine that they were sold is what I would imagine either sold or, or, or dispersed to the people who, you know, or investors in, in, in, in Bitmex. But I guess we'll find out. I don't know if anybody has any commentary about that, but yeah, it's. Look, all I'll say is, is, you know, coin margin futures are an interesting idea.
- [43:21]
G
What will.
- [43:22]
A
It will, it will live again, but it will live again differently. It's like everything repeats. Bitcoin as collateral will get used, Dave.
- [43:31]
G
So you know what, you know, it replaced coin margin positions. You ready for this one? It's bit mine and mstr and as it's the bitcoin and it's the coin treasuries that changed it. Because as, as the value of those go up, people are like, what did, what did Green just say? I'm like, no, no, no, that's what replaced it. Because if you were buying bitcoin and posting US dollars, right, or, or tether, then you would have no reflexivity in, in, in posting that as your collateral position. But now what's happened is we shifted it from being coin margin to being share margined trading, right? And that's where you have the volatility side, you know, on the side of MSTR and, and bit mine. So if anybody's on this call, Dave, do you think anyone in the call just gets what we just said?
- [44:20]
A
I'm sure quite a few people do, but I do think that, look, equities and commodity futures have always had an element of reflexive margining, which is, it's just that the bitcoin managed ones were different. I mean, all collateral in all financial markets should be based upon what you call the haircut. The haircut is essentially based off of volatility and liquidity, liquidity of the asset. And so that amount. The thing about coin margin futures were there was no haircut and the entire crypto world basically just took it as it was. So if you had whatever, if you're getting 10x leverage and you had a million dollars in bitcoin, you could buy another 10 million in Bitcoin. So if bitcoin dropped, you lost money on both. Whereas with a haircut, if they were giving you a 50% haircut on it, well then you wouldn't have nearly as much leverage as a resource result because of, based on Bitcoin's volatility. And that is where the future is going, right? You know, you will see that. And that means that assets like Bitcoin that are digitally digital and liquid will become usable as collateral within the financial system. There are certain innovative ways that. That's starting already and that does matter. But you're right, most of it is inside companies like MicroStrategy, which has scale, but they're not lending it out there. It's not, it's not, there's no, no extra lending going on. And a lot of this stuff that to make this work, that's one of the, the things that clarity, the act itself is needed for. You know, so, you know, hey, so I see John Deaton up here. John, you know, you and I both been saying the same thing about how dumb some of these critiques of clarity are. But one of the most important things is to try to, to get sanity and to have regulation that makes sense. And, and these are all the sorts of things that, that are part of it. I mean, are you hearing anything different or did you. We just lose. You had John up here and now I see him back down as a listener. I hate this. This, I, I hate this.
- [46:21]
G
So, so Dave, while you bring him back up and I really want to, you know, talk with him also. So, you know, Fred Krueger wrote this article that is Michael Saylor and the new John D. Rockefeller. And that's not good for Bitcoin. And, and he had two premises in there. And I'll be real brief. One premise was the conspiracy theory that the government will seize control of MSTR to get control of the bitcoin. That's always this conspiracy theory that, that's always going to happen. The second part he said was that just like John D. Rockefeller and what we saw specifically today, strategy continues to amass a large cash position. Now prior To December of 2025, if you heard of a company that acquires lots of cash to a bitcoiner they say would say two things. It's a melting ice cube or cash is trash. Now what's happened is as Fred framed it as being in the negative, having that huge cash pile is actually quite strategic in a bear market. And so what it gives him is this massive optionality too. To buy back stock. He could buy Bitcoin at a future date. There's a lot of things that he could do with it. And if he doesn't even use it, like, well, it's a melting ice cube. No, because that the cash now is equal to half the debt. It takes his net leverage down to 6% and most people reverse that metric. When strategy's net leverage is at is at 6%, that's the equivalent of him buying A house and putting down a 94% down payment. Most people think it's the opposite. And that's where they go, oh, strategy. And the reason why I know this because they strategy is over leveraged. They're leveraged to the hilt or no, their net leverage is 6%. They're like, yeah, exactly what I just said.
- [48:03]
A
Maybe it was before you joined I made the point that the while they were not over leveraged, the entire doom loop market was saying that nonsense. And a large part of why they've done what they've done is just to make that go away.
- [48:18]
G
Right, Totally agree. And so even if the cash is not used air quotes, not used for anything, the fact that it basically cut their net leverage from 12% to 6% is massively beneficial to having credit worthiness. And most people that are bitcoiners will say that's completely preposterous. To own cash, they should just have, it should be all bitcoin and they should just get rid of the cash. And they did that for the far
- [48:44]
A
bigger, the far bigger issue is, isn't really that. I mean the bigger issue that I've seen in a lot of the bitcoin spaces is just this whole entire notion of big bitcoin is a problem. I mean, I'm genuinely interested to have somebody explain to me how bitcoin could become digital gold and beyond without penetration through every aspect of the financial system. If someone could explain how that could happen, do they think that the entire world is going to wake up one morning and say, you know what? Every one of these companies that everybody uses for their entire financial lives is going to, has to disappear and they're going to go to self custody on their own. I mean, to me it's just, it's just nuts. But yet you get people talking about this. I mean one of the things I always liked about what Saylor said, and he's never changed on this, is that for bitcoin to get to be the preeminent digital asset, the asset that everyone cares about, first it has to penetrate the financial system. And yet you get all these bitcoiners talking about it can happen. Without that, it's like, okay, I mean, I don't see how that's remotely possible. I mean, amateo, I mean your background, you, you understand this, right? I see your hand up.
- [50:03]
H
I mean enough to know that it's absurd to think otherwise. And I think you're absolutely right, Dave. And I think that the reality here is that from the time that I've been involved in crypto and bitcoin. It was the institutional global adoption was being pushed pretty unanimously towards the effect that this was the way to take over. But it would be these decentralized layer that no one could control that would come in and be a disruption force for the traditional financial market to enable freedom for people all over the world by giving them a financial alternative that could whatever, insert narrative at the time, offset inflation, hedge against the dollar, be digital gold. And then ultimately once it actually came to fruition, so many of these die hards completely tucked tail and turned around on this. And it was and continues to be not like this, it shouldn't happen this way. And I think that ultimately a lot of these, and this might ruffle some feathers, but I think a lot of these OG bitcoiners got exactly what they were pushing for and they're just now don't like that it's mainstream and that it actually took off and did exactly what it was promised to do. But it doesn't have the same kind of rogue cyberpunk qualities that it did at its origins. But I just don't think you can expect it to maintain that when you start to get to these levels of global financial adoption.
- [51:41]
I
No.
- [51:42]
H
And so I just think, I think that that's where it stands right now.
- [51:44]
A
Yeah, I mean, I think, look, I, I sit there, I, I'm. We'll decide whether I'll, I'll jump on some of the, the other spaces to talk about this stuff. I just, I find it ridiculous. But it's sort of like, you know, when William was talking about Ethereum, you know, the difference is, is in the case of Ethereum, the need for institutions is not questioned. Right. You know, but now Ethereum went to proof of stake, so that's more centralized. So I guess it's a different, different ethos, but it's, it amazes me. It truth, it truthfully amazes. It amazes me. I mean all this notion, I mean I love some of the memes that come across the Internet, but the truth is, unless Bitcoin loses the ability through law or some ridiculous turn of events for people to hold it in their own wallets and transact peer to peer, which frankly I think is impossible or damn close to impossible, then why does anybody who owns it care if the majority of people use it via intermediaries and centralized centralized people? Because they want to do things the way they currently do them. Because eventually, as it grows in value, the use case and the UX, etc. For native Bitcoin, will improve, but it's not going to ever get that until then, right?
- [53:10]
H
Dave, I just want to add one thing to that, as you pointed out, something that I think is a dividing line on where things stand right now, which is the Ethereum ecosystem, net whole, the builders, the L1s, the L2s, anything EVM that's touching it is all working towards capturing this institutional and enterprise demand. And there's this giant chasm right now between where Web3 stands today, the liquidity, the products, the retail users, which tends to be a more web3 based product, and the actual blockchain Rails that we've talked about. And that chasm has the unified support for the most part of the Ethereum and EVM at large ecosystem to onboard this. And it's getting the institutional development investment to achieve this goal. And I think that that is a big part of what we'll continue to see helping support and drive Ethereum's gain in performance going into this, this next start of the cycle.
- [54:21]
A
I think that's right. William.
- [54:24]
B
Yeah, I wanted to echo what first of all, I agree with the last speaker and David, you said what you said about Bitcoin. You don't see it being as important as it should if it doesn't penetrate all of the financial ecosystem. But what you said described Ethereum because that's what Ethereum is doing. And unfortunately the Bitcoin holders have been holding Bitcoin because for them the punchline is price goes up. So they hold it and until the price goes up. Whereas with Ethereum the punchline is usage goes up. So Ethereum's main activity right now is to be everywhere, to make it a useful asset. Not just an asset that you hold, but an asset that is productive, that does things, that is used to securitize real world assets. You use it to punch in collateral on the blockchain, not just to move money, but to make it a useful asset and to even earn staking yield on it and put it in all kinds of defi types of instruments and new products. So that's kind of the, the forte that Ethereum has.
- [55:56]
A
Yeah, I just, I just want to make one point there because look, when Bitcoin becomes usable collateral, it will have a native yield, full stop. I just want people to understand that because it is easy to use Bitcoin as collateral and those people who have it will be able to loan it out and get a yield from, from those who want to demand it for use as usable collateral. So there is a path for Bitcoin to Have native yield. I could explain this. It's probably worth discussing. I might even do a video about it. But it's a little early. But it is going to happen because the technology is allowing it. So that part of the comparison isn't necessarily right. But you're right. It's usage versus value. That's clear. Anyway, Ryan, I saw your hand up.
- [56:41]
D
All right, thanks, Dave. It was great discussion. I didn't have a whole lot to add up for the last hour. Just enjoyed listening to you guys. I will say, though, that, and just as a reminder, I know we're kind of at the top here, that we are incredibly early. And it's so easy for even us as panelists. Like, we live in this world that we get so myopic on a very short time horizon on these ups and downs and these little, little bumps. But if we really zoom out, there's billions of people that haven't touched any of this stuff yet. There's billions of people to still onboard, and that can hold value. And. And what I like about bitcoin is anyone with electricity can plug in a bit Axe. Anyone with electricity can set up a miner. Anyone with electricity can onboard themselves with no banking, no kyc, aml. They can participate completely sovereign. And you can't really say that for most ecosystems. So we still have billions of people to go. And, you know, I. I'm excited for the future for bitcoin in general. And the more myopic we get, it can get depressing through the summer and we have the ups and downs and, you know, on every little bit we're hanging on. But I think the. If we stretch out the time horizon, we'll realize that we're so ridiculous, ridiculously early still.
- [57:59]
A
Yeah, I think that's right. And I think that, you know, we'll have these conversations, but it is worth, you know, discussing some of, you know, some of the things we touched on today I think are useful topics. You know, as. As you said, we are sort of running out of time. I can't tell Amateo and William, I still see your hands up. Are either of them new?
- [58:17]
B
No, that's an old one.
- [58:20]
H
Straight ghost.
- [58:22]
A
Okay, so in. In that case, unless anyone has some other other new topic to talk, we're going to cut it here. And we will be back on Wednesday morning and, you know, maybe we'll have some news. I mean, who knows? Although maybe it'll be the summer and the weather's been beautiful and, you know, whatever, but we'll see where we're at. At least, you know, maybe we'll have some notion of, of what our friends at, you know, Kevin Warsh and his band of merry men will will be doing, etc. Etc. But for now, everyone have a great day and stay safe out there. Enjoy your summer.
- [58:56]
I
Thanks, Dave.